Middle East Tensions Spark Dollar Weakness Amid Oil Rally

Investors are bracing for Thursday's and Friday's busy US schedule, but tensions in the Middle East have taken center stage. Military operations in the region resumed after Iran attacked overnight US military bases and targeted Iranian ships near Kharg island.

The oil rally continues, with spot oil trading at a fresh three-month high below $94.98-$95.51, which could pave the way for its first triple-digit price since May 22.

The US dollar has failed to capitalize on the Middle East developments and higher oil prices, instead rising against major currencies like the euro and yen. The dollar's weakness may be due to investors' expectations of a more hawkish European Central Bank (ECB) stance at its upcoming meeting.