Dollar Holds Firm Amid Escalating Middle East Tensions

The dollar held firm on Wednesday as renewed hostilities in the Middle East pushed oil prices higher and revived inflation concerns. The US launched airstrikes on Iran, prompting Iranian retaliation, which led to a rise in oil prices.

Rising Treasury yields and growing expectations of a Federal Reserve rate hike have reinforced the currency's safe-haven appeal. Markets are now pricing in a 67% chance of a September Fed hike, up from around 40% a week earlier.

The US dollar index was at 99.67, while oil prices rose nearly one percent in early trade on Wednesday, with Brent futures up 0.92% at $95.52 a barrel and WTI crude 0.89% firmer at $91.02.