Dollar Holds Firm as Middle East Tensions Push Oil Prices Higher

The US dollar held firm on Wednesday as hostilities in the Middle East pushed oil prices higher and revived inflation concerns.

Rising Treasury yields and expectations of a Federal Reserve rate hike have reinforced the currency's safe-haven appeal, even with recent economic data coming in below forecasts.

Oil prices rose nearly 1% on Wednesday, with Brent futures up 0.92% at $95.52 a barrel and WTI crude 0.89% firmer at $91.02.

Kumiko Ishikawa, a senior FX analyst at Sony Financial Group, said 'continued vigilance is needed over the situation in the Middle East today.'

The dollar index was at 99.67, with markets pricing in a 67% chance of a September Fed hike, up from around 40% a week earlier.