The dollar index traded around 101.2 on Tuesday, remaining near two-month highs amid expectations that the Federal Reserve will tighten policy further to combat energy-driven inflation from persistent US-Iran uncertainty. Oil prices extended their gains after Iranian officials reportedly questioned the prospects of reaching an agreement before the US midterm elections in November, following President Donald Trump’s rejection of Tehran’s latest proposal. Treasury yields also remained at multi-decade highs, with both the 10- and 30-year yields climbing above 5%. Markets are currently pricing in roughly a 70% probability of a Fed rate increase in October, following the central bank’s first rate hike in three years earlier this month. Meanwhile, Fed Governor Lisa Cook said potential productivity gains from artificial intelligence may not be sufficient to offset near-term price pressures, warning that this could contribute to broader inflation across the economy.