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• Euro, sterling slip; yen languishes near 159 per dollar
• Inflation risks stall bets for central bank rate cuts

The euro was last down 0.5% to $1.1564, after earlier touching a more than three-month low of $1.1505. The dollar was up 0.3% against the Japanese yen to a six-week peak, while sterling was 0.5% lower against the U.S. currency.

“Ultimately the U.S. dollar always plays well as a safe haven in a world of chaos,” said Juan Perez, director of trading at Monex ​USA.

“It also tends to win when the United States shows any type of military strength,” he said.

Stocks, bonds and precious metals slid ​as investors worried about the impact of surging oil prices on global inflation and economic growth. Iran on Monday ⁠named Mojtaba Khamenei to succeed his father, opens new tab as supreme leader, signaling that hardliners remain firmly in charge in Tehran a week into the war.

The dollar ​pared some gains after a Financial Times report said G7 finance ministers will discuss on Monday a joint release of oil from emergency reserves coordinated by ​the International Energy Agency.

The report saw oil prices trim gains after they earlier spiked to just shy of $120 per barrel . Brent crude was last up 10% at $102.99 a barrel, after earlier surging more than 25%.

Monex’s Perez, however, warned that the dollar’s new-found strength was not on a solid footing and could come under pressure should the conflict in Iran ​be resolved quickly.

“This war is not happening in the midst of a good economic situation for the United States. It’s actually happening at ​a moment when the economic situation is in doubt,” Perez said.

“The moment there is any quick resolution … it’s going to hurt the dollar big time,” he said.

Surprisingly weak ‌U.S. jobs data ⁠on Friday briefly stalled dollar gains and raised expectations for U.S. rate cuts, but that had faded by Monday.

Traders were last betting on around 35 basis points worth of Federal Reserve easing by the end of the year, having priced in more than 55 basis points in late February.

TRADERS WEIGH EXPOSURE TO ENERGY SHOCK

The Canadian dollar held steady against the greenback, finding support from rising oil prices. Canada is a major oil exporter, and ​higher crude prices tend to bolster ​both its economy and government revenues.

“The ⁠CAD has been able to dust off its “petro currency” credentials in a meaningful way over the past week,” Shaun Osborne, chief currency strategist at Scotiabank, said in a note. The loonie rose 0.6% against the dollar last ​week.

Analysts have said Asia could bear the brunt of the energy price shock, due to the region’s ​heavy reliance on oil and ⁠gas from the Middle East, while Britain and the euro zone are also heavily exposed.

The dollar was close to the 159 yen level on Monday.

“The real question is how high and how long prices stay elevated, because that’s what will ultimately determine the economic fallout,” said Deepali Bhargava, regional head of research ⁠for Asia-Pacific ​at ING.

“A prolonged conflict, coupled with continued currency weakness, would feed more directly into ​inflation pressures across the region.”

Leading cryptocurrency bitcoin rose 3% to $69,117, but remained close to the multi-year low touched in early February.

Reporting by Saqib Iqbal Ahmed