TOKYO/LONDON, April 5 (Reuters) - The Australian dollar jumped to a nine-month high on Tuesday after the country's central bank signalled higher interest rates were closer, while the euro languished near a one-week low, weighed down by the prospect of new sanctions against Russia.
The Aussie surged 1.23% to $0.7639, its strongest since June 14, after the Reserve Bank of Australia (RBA) dropped its pledge to be "patient" on tightening policy, while holding the key rate at a record low for now, as was widely expected.
"The RBA dropped its 'patience' narrative from the forward guidance for hiking, so what it means is the RBA is going to hike some time in the next few months," most likely in June, said Joseph Capurso, a strategist at Commonwealth Bank of Australia.
The euro was little changed, up 0.06% at $1.0972, after dropping as low as $1.0960 in the previous session for the first time since March 28.
It had reached a one-month high of $1.1185 just days earlier amid increased optimism over an end to the Ukraine conflict.
"At this stage, the euro’s performance is very strictly tied to the content of new sanctions the EU looks likely to impose on Russia; the bigger the implications for the energy market, the larger the impact on the euro," ING strategists told their clients in a morning note.
"Details of any new sanctions might not be released until tomorrow, and we expect the euro to remain unable to recover from yesterday’s moves unless the measures prove milder than expected," they added.
The United States and European countries pledged on Monday to punish Moscow over civilian killings in northern Ukraine, where a mass grave and tied bodies of people shot at close range were found in a town seized back from Russian forces.
New sanctions could include restrictions on the billions of dollars in energy that Europe still imports from Russia. The Kremlin denied accusations related to the murder of civilians.
The dollar index eased 0.07% to 98.902 from a one-week high of 99.083 reached overnight.
The greenback was flat against the yen at 122.73 yen , broadly tracking moves in long-term U.S. Treasury yields, as it continued to consolidate around 122.5 after retreating from a multi-year high of 125.105 on March 28.
Bank of Japan Governor Haruhiko Kuroda put some additional pressure on the currency pair, saying the recent pace of appreciation was "somewhat rapid," and policymakers are watching moves "carefully."
Editing by Jacqueline Wong and Mark Potter