Dollar climbs as oil prices rise after latest strikes by US and Iran

U.S. crude CLc1 rose 2.32% to $85.16 a barrel and Brent LCOc1 rose to $91.27 per barrel, up 2.3% on the day after hitting $91.56, its highest since June 11.

Optimism that a durable peace deal could be reached between the U.S. and Iran had pushed crude prices down as May began, and recent subdued inflation data had cooled market expectations of a rate hike at its policy meeting next week.

But oil prices have reversed in recent days as tensions in the region have flared, and comments from multiple Fed officials, including Chairman Kevin Warsh, have flagged concerns about inflation pressures.

The dollar index =USD, which measures the greenback against a basket of currencies, rose 0.1% to 101.09, with the euro EUR= down 0.04% at $1.141.

"We're now on the tenth night of strikes in Iran, so the market is pricing things rationally here," said Erik Bregar, director of FX and precious metals risk management at Silver Gold Bull in Toronto.