Dollar gains as Middle East conflict lifts oil, Fed hike looms

The U.S. dollar surged on Monday as conflict in the Middle East boosted oil prices and investors sought the safe-haven currency. Simultaneously, the Federal Reserve prepared to raise interest rates for the first time in over two years. The U.S. dollar index increased 0.3 percent to 99.41, reaching its highest level since September 2.

Meanwhile, the euro and British pound both declined slightly against the dollar. Oil prices, which surged as much as 5 percent to $105.61 per barrel due to Houthi attacks on Saudi Arabia's main pipeline and Iran-backed Houthi threats to the Red Sea, added to the dollar's strength. Speculation about an upcoming Fed rate hike, which many markets now believe is likely, further supported the dollar.

However, the dollar's recent gains could be at risk if the Fed decides to hold rates steady, which could be a surprise to markets.