The dollar rose against major currencies on Monday, boosted by safe-haven buying from investors worried that the Israel-Iran fighting could escalate into a wider regional conflict as they prepared for a week packed with central bank meetings.

With Iran and Israel showing no sign of backing down from their attacks, the prospect that Tehran might try to close the Strait of Hormuz - the world's most important gateway for oil shipments - raises the broader economic risk of disruption in the energy-rich Middle East.

Scheduled weekend talks between Iran and the United States over Tehran's nuclear program were also canceled after Israel launched a surprise attack on Friday.

On Monday, the dollar rose 0.14% to 144.3 Japanese yen, while the euro was down 0.14% at $1.1534. In early Asian hours, the dollar was steady against the Swiss franc at 0.81, while an index that measures the dollar against six other currencies was steady at 98.25.

Currencies positively correlated with risk such as the Australian dollar and New Zealand dollar were slightly higher.

"The dollar's role as a safe haven will certainly be tested, and recent price action is not reassuring," said Win Thin, chief global market strategist at Brown Brothers Harriman.

"If the Fed is as dovish as we expect, the dollar will likely weaken again on the deteriorating fundamental backdrop in the US."

The geopolitical tensions are the latest twist for investors and central bank policymakers who have been trying to navigate economic uncertainty sparked by US President Donald Trump's moves to reshape the global trade order this year.

While the dollar has been on a broader upswing in recent sessions, analysts are less convinced that trend can continue until there is more clarity on tariffs.

The currency has lost more than 9% of its value this year as investors remain nervous about Trump's deadline for a trade deal that is due in about three weeks, while agreements with major trading partners including the European Union and Japan have yet to be signed.

Investors will now be looking for progress in any bilateral meetings with the US alongside a Group of Seven leaders meeting in Canada.

The main agenda for the week is a number of central bank monetary policy decisions, with the US Federal Reserve in the spotlight on Wednesday.

The central bank is widely expected to leave borrowing costs steady but investors are likely to take the Fed's view on recent data that has broadly indicated a slowdown in economic activity even as risks to rising price pressures remain high.

"What you will see from their growth forecasts is that the shift to lower growth is very much in our hands and that will make the statement fairly neutral," said Chris Weston, head of research at Pepperstone. The Bank of Japan is expected to deliver its interest rate decision at the end of a two-day meeting on Tuesday, with most traders expecting no change in policy.

Expectations are that the central bank could also consider reducing its government bond holdings from next fiscal year as governments encourage more domestic holdings.

Central banks in the UK, Sweden and Norway are also scheduled to unveil their policy decisions.

Against an uncertain global backdrop, gold prices rose 0.22% to $3,435.50 an ounce and are just shy of their record highs hit in April.

Longer-dated U.S. government bonds were also slightly lower after a surge on Friday as investors weighed the implications of geopolitical tensions for price pressures. (alg)

Source: Reuters