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The dollar falls and the yen approaches six-year lows due to conflict in Ukraine

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By Iain Withers

LONDON, March 21 (Reuters) – The dollar fell against major currencies on Monday as investors awaited comments later in the day from U.S. Federal Reserve Chairman Jerome Powell and other central bank officials to obtain clues about the course of monetary policy.

* Currency markets have been rocked in the past month by the financial fallout from the Russian invasion of Ukraine as the economic costs have become more apparent, including higher inflation fueled by rising energy prices.

* Ukraine defied a Russian demand that its forces lay down their arms before dawn in Mariupol, where hundreds of miles of civilians have been trapped in a city besieged and devastated by Russian shelling.

* Russia calls the war, the largest attack on a European state since World War II, a “special military operation” to disarm Ukraine. The West describes it as a pretext for invasive aggression.

* As the crisis continues, centrals around the world have been grappling with the pace they must take in their actions in the face of increasingly suffocating inflation.

* The Fed raised its key interest rate by 25 basis points last week for the first time since 2018. Traders are now focused on the possible speed and size of future rate hikes.

* The dollar index, which measures the greenback against six peer currencies, fell 0.1% to 98,222 units.

* The Fed’s stance contrasts with the Bank of Japan, which on Friday maintained its huge stimulus program and left its interest rates unchanged, arguing that the rise in inflation would be temporary.

* The yen eased further on Monday, trading down 0.1% at 119.230 yen per dollar, after touching 119.40 yen on Friday, its lowest level since 2016.

* The euro is expected to strengthen slightly against the dollar on the day, rising 0.1% to $1.10585.

* This week’s speeches by various officials of the European Central Bank (ECB), including its president, Christine Lagarde, will also be closely watched by traders.

(Reporting by Iain Withers, Additional Reporting by Alun John in Hong Kong. Editing in Spanish by Marion Giraldo)

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