The U.S. dollar index was up ⁠0.1% at 101.13 after earlier touching its highest level since July 8

The dollar rose against most of its peers as a renewal of hostilities in the ‌Middle East fanned inflation fears and raised prospects for interest rate hikes among world’s central banks.

Against Japan’s currency, the dollar was up 0.2% at 162.075 yen. The euro weakened 0.1% to $1.1397 while the British pound slid 0.2% to $1.3374.

The Australian dollar was down 0.3% at $0.6928 while its kiwi counterpart dropped 0.1% to $0.5757.

Iran and U.S. exchanged heavy assaults at the weekend, with Tehran targeting U.S. facilities on Sunday and saying it had again closed the vital ⁠Strait of Hormuz shipping route.

Oil prices advanced in Asian trade, with Brent crude futures up 4.1% at $79.11 a barrel.

After the flare-up ​into the end of last week which continued over the weekend, the dollar has responded, and the crude oil ​price has been the driver, said Tony Sycamore, market analyst at IG in Sydney. This reinflames concerns that if the energy prices rise from here, we could start to see rate hikes pulled forward.

Fed funds futures are pricing an implied 50.9% probability of two ​or more rate hikes by the time of the U.S. central bank’s December meeting, up from a 47.6% chance on ​Friday, according to the CME Group’s FedWatch tool.

The U.S. dollar index, which measures the strength of the country’s currency against other ‌currencies, was up ⁠0.1% at 101.13 after earlier touching its highest level since July 8.

The dollar was obviously the big winner from the war last time. But it’s starting from a pretty different point this time, having strengthened quite a lot and there already having been a fairly lasting repricing of the Fed outlook, said Thomas Mathews, head ​of markets for Asia Pacific ​at Capital Economics in ⁠Wellington.

It’s not clear to me the greenback would gain as much this time if the situation continued to worsen, which I think is probably reflected in trade so ​far, he said.

Inflation risks are likely to remain in focus with the release of U.S. CPI data on ​Tuesday, PPI ⁠gauges the following day, and Fed Chair Kevin Warsh’s testimony before the House and Senate, Westpac analysts wrote in a research report.