The dollar index edged higher toward the 101 mark on Tuesday after posting small losses in the previous two sessions, showing only a modest reaction to another increase in oil prices.
Oil gained after reports that vessels had been attacked near the Strait of Hormuz, highlighting the fragile security situation in the Middle East and the potential risks to global energy supplies.
The rise in oil prices revived inflation concerns and prompted traders to modestly increase bets on additional Fed rate hikes this year.
Market-implied odds of a rate increase as early as September climbed to around 58%, up from 56% a day earlier.
Investors are now awaiting the release of the FOMC meeting minutes on Wednesday for further clues about the Fed's policy outlook, following the central bank's more hawkish stance at its June meeting.
The dollar posted modest gains against most major currencies but remained slightly weaker against the yen.