Dollar Holds Near Two-Month High Amid Rate Hike Bets and Diplomatic Tensions

The dollar remains near its two-month high as investors weigh stronger rate expectations against diplomatic efforts to ease tensions in the Middle East.

Falling oil prices, which have risen by 37% since late February, have not alleviated market concerns about inflation. Brent crude futures are priced at $99.22 a barrel, and investors expect monetary policy to tighten further.

The dollar's support from interest rates appears sustainable, but futures are pricing in a more aggressive tightening cycle than the Federal Reserve's own forecasts suggest, according to Kieran Williams, head of Asian currency strategy at InTouch Capital Markets. The dollar now needs macroeconomic data to confirm this outlook.