The dollar rose on Monday as uncertainty over the Israel Iran conflict persisted following US strikes on Iranian nuclear facilities over the weekend.

By around 2.45 CEST, the Dollar Index had risen 0.61% in daily trading to 99.31.

Over the month, it showed a 0.19% increase, although its year-to-date value was still down almost 9%, failing to win back losses linked to erratic policies from the Trump administration.

US President Donald Trump said that the weekend strikes had caused “monumental damage”, although some Iranian officials downplayed the impact. The full extent of the damage could not immediately be determined by the UN’s nuclear watchdog.

Israel — meanwhile — continued with its strikes on Iran on Monday, while Tehran vowed that it would “never surrender to bullying and oppression”.

Several nations warned Iran against a retaliatory closure of the Strait of Hormuz, a shipping lane responsible for around 20% of global oil and gas flows.

“In this morning’s trading session, the dollar staged an expected rebound. The demonstration of US military strength, as well as the fear of higher oil prices, weakened the euro,” said ING economists in a note.

Higher oil prices would likely drive up inflation and discourage the US Federal Reserve from cutting rates in the near future. This would spell bad news for US consumers but would simultaneously increase the dollar’s attractiveness to investors.

“Looking ahead, one of the key questions is whether US involvement in the conflict could restore the dollar’s safe-haven appeal. Here, a crucial factor will be the duration of any potential Strait of Hormuz blockade. The longer such a blockade lasts, the higher the likelihood that the value of safe-haven alternatives like the euro and yen is eroded, and the dollar can enjoy a decent recovery,” said ING economists.