The dollar index was a touch higher at 101.15 and on track for ​a 1.7% gain in September, its best month since June

The dollar inched higher to hold near a two-month ​high on Monday, as the US-Iran standoff continued to push up oil prices while investors looked ‌ahead to a data-packed week for more clues on inflation and central banks’ moves.

The euro and sterling were both 0.1% weaker against the dollar, last at $1.1379 and $1.3232, respectively, hovering near multi-month lows against the dollar.

The dollar index was a touch higher at 101.15 and on track for ​a 1.7% gain in September, its best month since June.

Oil prices jumped more than 1% ⁠on Monday with Brent crude futures last above $106 a barrel, after US president rejected a peace deal ​with Iran to resolve their conflict and reopen the Strait of Hormuz.

Energy supply risks and robust fundamentals in the ​US have heightened inflation concerns and prompted traders to price in a more hawkish central bank, while elevated long-end Treasury yields also supported the dollar.

The greenback could overshoot in the near term if energy market tensions persist and inflation risks continue to build, said Sim Moh Siong, FX strategist at OCBC.

The bank’s base case remains for a moderate USD rally into ​year-end, he added.

The market’s focus is set to turn to US data releases as the week unfolds, with the PCE Index ⁠on Wednesday and non-farm payrolls on Friday both expected to be consistent with further policy tightening.

Currently, markets are seeing a 65% chance of a rate hike from the central bank when the central bank meets next at the end of October, according to CME Group’s FedWatch tool.