Dollar stays near 18-month high as Mideast conflict, inflation data in focus

The US dollar remained near its strongest level in 18 months on Monday, as tensions in the Middle East and upcoming US inflation data influenced investor sentiment. Oil prices fluctuated during Asia's trading session, with a decline of 1% for Brent crude futures to $103.55 per barrel. The dollar index, which gauges the greenback's strength against six currencies, stayed close to its 18-month peak.

Analysts at Commonwealth Bank of Australia anticipated the Houthis would continue their attacks on Saudi Arabian energy assets, contributing to oil price gains and further strengthening the dollar. The US dollar weakened against the Japanese yen and the Australian and New Zealand dollars, while the euro strengthened slightly. The focus of traders shifted to the US consumer price index report expected on Wednesday, which could provide insight into the Federal Reserve's potential interest rate decisions in late October.

Currently, there is an 81% chance of the Fed holding steady on interest rates this month, up from 51% a month earlier, according to the CME FedWatch tool. Some analysts suggest the dollar's rally might pause momentarily due to tightened global financial conditions resulting from sharp moves in bond markets.