A gauge of the dollar’s strength had its largest intraday gain in nearly two years on February 24 as markets grappled with the biggest security threat in Europe in decades.

The Bloomberg Dollar Index rose as much as 1.4%, approaching its highest levels of the past year, before paring gains as U.S. technology shares rebounded. Traders flocked to the safety of the greenback after Russia’s invasion of Ukraine, sending the U.S. currency higher against all of its Group-of-10 peers.

On the continent, the euro dropped to a nearly seven-year low against the Swiss franc as investors flocked to haven assets. The pair dropped as much as 1%, the largest slide in more than three years, before rebounding slightly. The common currency posted an even bigger decline against the greenback, falling as much as 1.8% to 1.1106, its lowest level since June 2020.

Demand for the dollar crushed other European currencies, with those of Sweden, Norway and Denmark declining at least 1%. Even the Swiss franc, a traditional haven, lost ground against the dollar as Russian tanks moved into Ukraine.

“For the broad USD, one of the most important aspects of today’s trading session is that the currency has rallied in spite of the OIS curve paring back Fed rate hike expectations,” Stephen Gallo, European head of FX strategy at BMO Capital Markets, said in a note. “We are observing a purely a ‘risk-off’ dominated FX market with an understandable geographical separation between North America and Europe.”

The euro, for its part, erased what remained of gains accrued after the European Central Bank struck a more hawkish tone earlier February. The invasion sent oil prices soaring, complicating the outlook for officials planning to tighten policy to deal with inflation that’s already at the highest in decades. Still, money-markets pared bets on interest-rate hikes.

“FX investors believe that any intensification of the crisis will aggravate the stagflation risks to the euro-zone recovery, delay any meaningful policy normalization by the ECB and weigh on the euro,” said Valentin Marinov, head of G-10 currency strategy at Credit Agricole SA.

Traders are expecting more volatility and further losses. The cost of hedging price swings in the euro-dollar pair over the next week reached its highest level since December 2020 in the midst of the market turmoil, while a measure of options sentiment over the same tenor is at its most bearish on the common currency since March 2020.

While wagers on rate increases were trimmed slightly on February 24, one quarter-point hike is still expected from the ECB by year-end. Six are expected by the Federal Reserve and five by the Bank of England. The pound slid as much as 2% against the dollar.

In recent weeks, central-bank officials have acknowledged that the escalating tensions between Russia and NATO allies over Ukraine will affect the outlook for energy prices. Now they need to weigh the economic consequences of measures to isolate Russia against higher inflation.

The ECB said it is “closely monitoring” the situation in Ukraine and will conduct a “comprehensive assessment of the economic outlook” at their rate-decision meeting on March 10. Governing Council member Gabriel Makhlouf said the crisis over Ukraine probably won’t keep the ECB from agreeing on a faster wind-down of asset purchases at the next meeting.