Dollar Hits Two-Month High as Rate Hike Expectations Outweigh Oil Price Volatility

The US dollar rose to its strongest level in two months due to expectations of interest rate hikes. The euro and sterling also weakened against the dollar.

The Federal Reserve has flagged the possibility of more rate hikes if inflation does not ease, which is driving up demand for the dollar. Oil prices have also moderated somewhat, but the path forward remains unclear given the ongoing conflict between the US and Iran.

Currency analysts are waiting to see how central banks will respond to rising inflation and supply concerns. The Bank of Japan's recent rate hike was seen as insufficiently hawkish by some investors.