World shares, commodities and currencies went on a whiplash ride at the start of this week as rising tensions in Ukraine over the weekend were dampened down abruptly on Tuesday after Russian President Vladimir Putin ordered troops involved in military exercises to return to base.

At the start of the week, threats by Putin to invade Ukraine heightened tensions between the United States, and its western allies, and Russia to Cold War levels. Risk sentiment soured quickly and world equity markets plummeted lower. Safe-haven currencies, mainly Japanese yen and Swiss franc, were extremely bid and started the week sharply higher. Oil and gold prices also soared higher at the beginning of the week.

Over the weekend Russian forces seized control of Crimea as Putin declared his right to invade his neighbor. While Kiev prepared for conflict, the US through its Secretary of State John Kerry described Moscow’s move as an “incredible act of aggression”. President Obama called Moscow’s hold on Crimea as violation of international law and of Ukraine’s sovereignty. Moscow on the other hand argued with the United Nations that its actions in Crimea were legal.

Oil futures in the US rose to a five-month high above $104.50 per barrel as the threat of gas supply disruption boosted oil prices. The Russian ruble plummeted to an all-time low and Russian stocks shed more than $55 billion, as Western nations threatened to isolate Russia economically.

Putin calls back troops, sparks rally in risk assets

On Tuesday, riskier assets rebounded and climbed higher after Putin ordered an end to what he called a “military exercise” in the western area of Ukraine. Demand for safe-haven assets dampened amid signs that Putin was looking to ease the growing East-West tensions.

The yen retreated on Tuesday, and gold fell sharply from a four-month high. The Nipponese currency was also weighed by comments from Bank of Japan Governor Kuroda, who said there was momentum for the carry trade.

USD/JPY climbed to 101.95 by the time of writing on Tuesday. It had touched a one-month low by 101.20 on Monday and despite the apparent easing of tensions, it could still drop further if risk sentiment darkened. The pair may continue to find support amid speculation that the Bank of Japan may announce more stimulus.

In the near-term, the 100.75/101 region represents a key area. 100.75 represent a three and a half month low while the psychologically important 101 barrier is also the 50 percent retracement of the October to January rally. A decisive break of this area with no contemporary interventions by the BOJ may signal further weakness towards 100 or lower. On the other hand, a bounce here may give scope for more gains to 102.80.

The Swissie was also back on the spotlight as forex investors sought its safety given the events in Ukraine. EUR/CHF plunged to a fourteen-month low by 1.2104, but sprung back to 1.2172 on Tuesday. Support ahead of the hard floor imposed by the Swiss National Bank of 1.2000 is found by 1.2060. However, if the risks of conflict in the region abate, we should see the pair trade back above 1.2200.

Euro remains bullish, eyes 1.3900

The euro trimmed its losses from Monday, and just above 1.3750 against the dollar. It still remained well away off Friday’s peak by 1.3825, but nevertheless held its bullish bias by staying above 1.3700. Last week EUR/USD accelerated to its highest this year, and bounced back from a dip to 1.3643. It rallied after a better than expected inflation reading for the region on Friday, which showed the European Central Bank’s latest rate cut was beginning to take its toll.

The pair remains in a bullish configuration in the neat to medium term. A break of 1.3840 and eventually last year’s high of 1.3893 could give scope for a larger shift in structure and push the pair back above 1.4000. Risks to the downside for the EUR/USD are posed mostly by a spike in risk aversion with the geopolitical turmoil between Russia and the West. Strength for the greenback may also result from a better expected jobs report from the world’s strongest economy on Friday. Market consensus is for a 150k change in non-farm payrolls and no change in the jobless rate at 6.6 percent.