The dollar made a modest advance against most of its global peers at the start of Asian trading on Monday as the conflict in the Middle East escalated, with oil prices rising and investor confidence remaining fragile after turbulence last week.
The U.S. dollar climbed 0.1% to 162.48 yen, the greenback's strongest level since July 9, as geopolitical tensions rose and investors sought safe-haven assets.
The euro was down 0.1% at $1.1426, while the British pound was level at $1.3445. The Australian dollar slipped 0.1% to $0.6975, while the New Zealand dollar declined 0.2% to $0.5833.
"FX markets were relatively subdued, with the USD broadly stable, while the AUD weakened against the greenback and most major currencies," Westpac analysts wrote in a research report.
"Market sentiment continued to deteriorate as concerns around semiconductor valuations weighed on risk appetite, while tensions in the Middle East escalated after Iran suspended its commitments under the interim peace deal."
Brent crude futures jumped 3.3% to $90.97 a barrel at the start of Asian trading after the U.S. said on Sunday it had begun a ninth straight night of attacks against Iran after earlier announcing that at least two U.S. military personnel were killed in Jordan.
Markets continue to anticipate no change to rates at the Federal Reserve's next meeting on July 29, with Fed funds futures pricing an implied 85.6% probability of a hold, compared to a 61.5% chance a month ago, according to the CME Group's FedWatch tool.
Cleveland Fed President Beth Hammack on Friday added her voice to a growing chorus of policymakers arguing interest rates may need to rise to beat back persistent inflation, setting up a charged debate at the Fed's next meeting and the possibility of dissents at Chair Kevin Warsh's second meeting at the helm.
The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, was up 0.1% at 100.84.
In cryptocurrencies, bitcoin was up 0.2% at $64,637.89, while ether was 0.2% higher at $1,869.72.
