HONG ​KONG: The ⁠dollar firmed against most major currencies on Monday as fresh Middle East tensions lifted oil ‌prices and a global bond selloff dented risk appetite, while yen weakness kept traders on alert for possible Japanese intervention.

The ​euro was last at $1.1609 and sterling fetched $1.3305, both down more than 0.1%.

The risk-sensitive Australian dollar weakened 0.4% to $0.7121, while ​the New ​Zealand dollar was little changed at $0.5827.

The dollar index, which measures the greenback against a basket of major currencies, was a touch firmer at 99.393.

Oil prices climbed on Monday, with Brent ⁠crude futures rising more than 1% to over $110 a barrel, after a nuclear power plant in the United Arab Emirates came under attack and efforts to end the U.S.-Israeli war with Iran appeared to have stalled.

"It appears conditions for risk and bonds are deteriorating, and conditions for the dollar ​rally to extend ‌this week are ripe," ⁠analysts at Barclays ⁠wrote in a note.

Signs that the Strait of Hormuz will remain clogged for longer are also exerting upward ​pressure, with the dollar gaining 0.5% to 1% for every 10% rise ‌in oil prices, they added.

A global bond rout also ⁠dented risk sentiment, showing little sign of recovery, with Treasury yields staying elevated amid fears that Middle East energy disruptions could fuel inflation.

The yields on benchmark U.S. 10-year notes and the two-year notes, which typically move in step with interest rate expectations for the Federal Reserve, were last at 4.607% and 4.085%, respectively, near their highest in a year.

"Near term, USD may stay better bid on dips if yields remain elevated and markets continue to price a more hawkish Fed reaction function," Christopher Wong, FX strategist at OCBC, said in a note.

The focus this week will ‌turn to the Federal Open Market Committee's minutes and U.S. flash Purchasing ⁠Managers' Indexes, which could help clarify how much concern there is ​within the Fed over persisting inflation, and whether U.S. activity momentum is holding up under tighter financial conditions, he added.

Against the yen, the dollar traded at 158.84, up 0.04% from late U.S. levels, with renewed yen ​weakness putting investors on ‌alert for possible intervention.

The offshore yuan traded at 6.8163 yuan per ⁠dollar ahead of Chinese activity data due ​later on Monday. (Reporting by Jiaxing Li in Hong Kong; Editing by Jacqueline Wong)