Dollar Hits Two-Month High on Rate Hike Expectations and Iran Diplomacy

The US dollar strengthened on Wednesday, reaching its highest level in two months as investors assessed the possibility of additional interest rate hikes by major central banks. Expectations of tighter monetary policy, along with easing crude oil prices and diplomatic efforts surrounding the Iran conflict, shaped trading sentiment.

The dollar index, which tracks the US currency against six major currencies, gained 0.16 per cent to 100.71. The euro fell to $1.14282, its lowest level since late July, while the British pound traded at around $1.3316.

Kieran Williams, head of Asia FX at Intouch Capital Markets, said the dollar's support from interest rates could continue, although markets are already anticipating more tightening than reflected in the Fed's projections.