EUR/USD sets for a ground near 1.1280 amid extension of military drills in Belarus

EUR/USD has pared its opening hour gains after the announcement from the Belarusian defence ministry that Russia will extend military drills in Belarus that were due to end on Sunday.

Meanwhile, European Commission President Ursula von der Leyen said Russia would be cut off from international financial markets and denied access to major exports needed to modernize its economy if it invaded Ukraine, as per Reuters. Should this occur, the supply chain may get disrupted and the economy could face a vulnerable phase.

Earlier, the European Council President Charles Michael announced that the European Union (EU) is prepared to impose sanctions on the Kremlin knowing that the verdict could dampen its own economy. This has raised bets over a potential invasion of Russia on Ukraine and, consequently, investors are avoiding risk-sensitive currencies.

The US dollar index (DXY) is trading flat in the Asian session, eyeing cues from Asian markets, which are trading subdued ahead of the interest rate decision from the People’s Bank of China.

Apart from the headlines of the Russia-Ukraine tensions, Europe’s PMI monthly Composite Reports on Manufacturing and Services by Markit Economics on Monday holds significant importance. Europe’s PMI monthly composite is likely to land at 52.7 as per the market forecasts, higher than the previous figure of 52.3.