Crude has moderated slightly from a surge to nearly $120 a barrel earlier this month, yet is well above levels prior to the outbreak of the war in late February

The dollar firmed on Thursday, as the currency’s recent safe haven status was bolstered by muddled messaging on the state of peace talks between the U.S. and Iran.

At 22:10 GMT, the US Dollar Index gained 0.3% to 99.90.

The messaging around the Middle East war has been mixed. Iran’s public response to a 15-point peace proposal from the U.S. has been one of harsh rejection, but the U.S. president and his administration said that negotiations were ongoing. Tasnim reported that Iran had officially delivered its response to the U.S. proposal and was awaiting Washington’s reply.

With traders attempting to parse through a deluge of developments out of the Middle East, oil prices once again floated above the $100 a barrel threshold. Crude has moderated slightly from a surge to nearly $120 a barrel earlier this month, yet is well above levels prior to the outbreak of the war in late February.

Crucially, amid a wave of reports and rumours, the Strait of Hormuz remains effectively closed. The vital waterway through which nearly a fifth of world’s oil and natural gas flows has been all but shuttered by the threat of Iranian attacks for weeks.

An energy price shock caused by the Iran war has ignited renewed upward pressure on inflation and created substantial uncertainty in the global economic outlook, according to a report from the Organization for Economic Co-operation and Development.

Investors have widely begun to wager that a spike in inflation could lead central banks to raise interest rates in the months ahead.

Against this uncertain backdrop, traders have piled into the dollar, helping put the dollar on pace for a monthly climb of more than 2%.

Markets may well require some more convincing headlines on de-escalation to take the dollar meaningfully lower from here, analysts at ING said in a note.