Dollar Surges as Rate Hikes Loom Amid Ongoing Iran Conflict

The US dollar rose to its strongest level in two months on Wednesday due to prospects of interest rate hikes, but easing oil prices could alter the global inflation and monetary policy outlook.

The euro eased to its weakest level since late July, trading at $1.14282, while sterling bought $1.3316.

Currency markets are currently weighing the impact of recent rate hikes and hawkish rhetoric from major central banks, as well as the US-Israeli conflict with Iran driving oil prices higher and fueling inflation worries.

Kieran Williams, head of Asia FX at Intouch Capital Markets, stated that 'the dollar's support from rates looks durable, but futures already price more tightening than the Fed's own projections, so the dollar now needs the data to confirm it.'