The U.S. dollar climbed on Monday as investors weighed the repercussions of a potential U.S. ban on Russian oil imports and gas.

The euro fell as much as 0.61% on the dollar and hit $1.086, while the U.S. dollar index hit a 22-month high and was last up 0.56% at 99.22.

Meanwhile, commodity currencies were swept to multi-month peaks as the war in Ukraine briefly sent oil prices spiking to multi-year highs and stoked fears of a stagflationary shock that could hammer Europe.

The euro is down almost 4% since Russia began what it calls a “special military operation” in Ukraine and is not far from testing its 2020 trough of $1.0636. It also briefly fell below one Swiss franc for the first time since the Swiss quit their euro peg in 2015, hitting 0.9970 before jumping to 1.0051.

“The euro is being picked on,” said Sean Callow at Westpac in Sydney. ”(The war) is on Europe’s doorstep,” he said.

The euro briefly dropped Monday to its lowest since mid-2016 on the pound at 82.01 pence. Sterling has also been weighted by gloom over Europe’s outlook and fell 0.9% against the dollar. Euro/dollar volatility gauges are at their highest since March 2020.

Supply shock
The conflict and harsh western sanctions on Russia have sent Russian assets tumbling and prices of Russian exports such as precious metals, oil and gas soaring at a time when the global economy was already grappling with inflationary pressures.

“This is very bad news for global growth – particularly Europe, given their dependence on gas from Russia,” ANZ analysts said in a note.

Among gainers, the Australian dollar briefly cracked January’s peak to scale a four-month high of $0.7440. The New Zealand dollar also cleared a January top to reach $0.6926.

The U.S. dollar rose against the swiss franc and the yen. It was last up nearly 1% on the franc at 0.9256 and about 0.42% higher on the yen at 115.26.

The European Central Bank, which meets on Thursday, faces a complicated picture as inflation and growth pressures bear down and economists reckon it will wait until late in the year to move rates higher.