Dollar rallies as oil surge and geopolitical risks lift safe-haven demand

The US Dollar strengthened on Monday as escalating Middle East tensions pushed oil prices sharply higher and unsettled global markets. The Dollar Index rose to around 99.59, its highest level since September 2.

Brent crude jumped about 3% toward $108 a barrel after attacks on Saudi energy infrastructure and renewed uncertainty around regional diplomacy. Higher energy prices are raising inflation concerns and supporting demand for the dollar as a defensive asset.

Markets are also increasingly pricing a Federal Reserve rate hike this week, with money-market expectations around 90%. The combination of higher oil prices, elevated Treasury yields and stronger Fed expectations is keeping the greenback supported.

Traders will watch the Fed decision and guidance closely because any signal that policymakers remain concerned about inflation could extend the dollar rally, while a softer stance could trigger a pullback.