The dollar steadied near a six-week high on Wednesday as markets remained on edge over the Iran war and its potential to drive up interest rates.
The Japanese yen firmed slightly amid increasing conviction in a June interest rate hike by the Bank of Japan, while the Indian rupee hit a fresh record low amid continued pressure from high oil prices.
Oil prices fell slightly on Wednesday after the U.S. flagged progress in negotiations in Iran. But losses in crude were limited as the Strait of Hormuz remained close.
This left broader markets uncertain over when the war will end, while fears over its inflationary impact remained largely in play.
Elsewhere, the euro was flat, while the pound tread water ahead of key consumer inflation data.
Dollar near 6-week high amid rate hike speculation, Iran uncertainty
The dollar index and dollar index futures rose slightly, and were close to levels last seen in early April.
The greenback was buoyed by increasing speculation over whether sticky inflation will push the Federal Reserve into hiking interest rates later in the year.
Philadelphia Fed President Anna Paulson said on Tuesday evening that while current monetary policy appeared to be appropriately restrictive, it was “healthy” for financial markets to speculate over potential rate hikes.
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