LONDON - The dollar dipped against most major currencies on Monday, but ​held near last week's highs as ⁠the Middle East conflict continued to nudge oil prices and global bond yields higher, while the yen weakened enough to keep traders watching ‌out for possible intervention.

The euro was last up 0.1% at $1.1635 and sterling was up 0.3% at $1.3351. The dollar index, which tracks the U.S. currency against six others, was a ​touch softer at 99.17, having posted its strongest weekly performance in three months last week.

"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 closed for longer are also exerting upward pressure, with the dollar gaining 0.5% to 1% for every 10% rise in oil prices, they added.

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 on Iran appear to have stalled.

Further denting risk appetite, last week's global bond rout extended into Monday, as rising energy prices prompted investors to assume central banks could quickly raise rates.

Benchmark 10-year U.S. Treasury yields were up 1 basis point on the ​day at 4.603%, having risen ‌by 15 bps ⁠in the last two weeks alone.

Commerzbank ⁠strategist Michael Pfister said shifting expectations for interest rates - and the subsequent rise in bond yields - were at the heart of the dollar's relative resilience.

"Although expectations regarding the ​Fed had shifted significantly towards a more restrictive monetary policy from the outset, market participants were still reluctant to ‌bet on interest rate hikes. This changed last week, with expectations regarding the Fed shifting most ⁠markedly among the G10," he said. Minutes from the Federal Reserve's last meeting and U.S. flash purchasing managers' surveys later this week should help clarify how concerned the central bank is about persistent inflation and whether activity momentum is holding up, Christopher Wong, FX strategist at OCBC, said in a note.

Markets are now pricing in a more than 50% chance that the Fed would raise rates by December, according to the CME FedWatch tool. Investors are also watching as the Group of Seven finance ministers and central bankers meet in Paris on Monday and Tuesday to discuss how to bring a lasting end to the war in Iran. The yen last traded at 158.94, around its weakest since April 29, which put investors on alert for a possible intervention.

Officials in Tokyo intervened a couple of times in late April and into early May, which saw the yen strengthen by around 3.5% in the ‌days that followed, but the currency has given up roughly 7% of that rally already. Japan's ⁠government is likely to issue fresh debt as part of funding for a planned extra budget ​to cushion the economic blow from the Middle East war, a government source with direct knowledge of the deliberations told Reuters on Monday. Meanwhile, the offshore yuan weakened to 6.808 yuan per dollar . The meetings between U.S. President Donald Trump and Chinese President Xi Jinping last week offered no major breakthroughs, while data released on Monday ​showed China's growth lost ‌momentum in April.

HSBC strategists said in a note on Monday they believed the yuan has more scope to ⁠appreciate against the euro than against the dollar, the yen or ​the Korean won.