The Australian and NZ dollars weakened against their major counterparts in the Asian session on Tuesday, as Asian stocks dropped on growing concerns over the possibility of the Federal Reserve tightening monetary policy aggressively as well as the threat of a Russian invasion into Ukraine.

The Fed meeting will begin later today, although no policy change is expected.

Investors await the Fed statement for more clues about the timing and pace of rate hikes for this year.

U.S.-Russia tensions escalated amid a continued buildup of Russian troops near the border of Ukraine.

The U.S. placed 85,000 troops on high alert in order to support NATO forces in Eastern Europe if needed.

The aussie initially got a support from stronger-than-expected inflation data out of Australia, but it eased during the course of the trading session.

Data from the Australian Bureau of Statistics showed that consumer prices in Australia were up 3.5 percent on year in the fourth quarter of 2021. .

That exceeded expectations for an increase of 3.2 percent and was up from 3.0 percent in the third quarter.

The aussie dropped to 0.7129 against the greenback and 1.5865 against the euro, off its prior highs of 0.7175 and 1.5771, respectively. The aussie is poised to find support around 0.70 against the greenback and 1.60 against the euro.

The aussie retreated to 81.05 against the yen and 0.9020 against the loonie, following its early high of 81.78 and a 5-day high of 0.9055, respectively. The aussie may locate support around 78.00 against the yen and 0.88 against the loonie.

Pulling away from its previous highs of 0.6709 against the greenback and 76.49 against the yen, the kiwi declined to 0.6669 and 75.83, respectively. On the downside, 0.65 and 74.00 are possibly seen as its next support levels against the greenback and the yen, respectively.

The kiwi was down at 1.6961 against the euro and 1.0699 against the aussie, reversing from its prior highs of 1.6869 and 1.0645, respectively. Next key support for the currency is likely seen around 1.70 against the euro and 1.09 against the aussie.

Looking ahead, German Ifo business sentiment index for January is due in the European session.

U.S. consumer confidence index for January, FHFA's house price index and S&P/Case-Shiller home price index for November will be out in the New York session.

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