Dollar holds near 2-month high as markets weigh rate hikes, Iran

The dollar steadied near its strongest level in two months on Wednesday on prospects of interest rate hikes in the near term, while easing oil prices on hopes for a diplomatic breakthrough to end the Middle East war kept investors on edge.

The euro was at $1.1446 in early trading, loitering near its weakest level since late July. Sterling bought $1.3337. The dollar index , which measures the U.S. currency against six rivals, was at 100.56.

The recent barrage of rate hikes and hawkish rhetoric from major central banks has taken center stage in currency markets as the U.S.-Israeli conflict with Iran drives oil prices higher and fans inflation worries.

Investors are now anticipating further tightening from central banks, with Federal Reserve officials flagging the possibility of more hikes if inflation does not ease.