The dollar strengthened against the euro and yen on Wednesday as investors remained on edge over further escalation in the Middle East conflict. Fresh attacks on tankers and energy storage facilities, coupled with threats of oil prices hitting $200 a barrel, have driven up energy prices worldwide.
Oil prices surged over 4 percent as attacks in the Strait of Hormuz worsened supply disruption fears. Analysts deemed the International Energy Agency's proposed record oil reserve release inadequate to ease these concerns.
US military forces "eliminated" 16 Iranian mine-laying vessels near the Strait of Hormuz on Tuesday. President Donald Trump warned Iran to remove any mines laid in the strait immediately.
Meanwhile, US consumer prices rose moderately in February, though households paid more for gasoline and groceries. Traders are now focused on potential inflation surges in coming months due to elevated energy prices, which could complicate the Federal Reserve's plans for interest rate cuts.
In other markets, the Australian dollar rose, supported by expectations of a rate hike from the Reserve Bank of Australia. The British pound remained flat amid fears of an oil supply shock. Bitcoin saw a modest increase, trading near a multi-year low.