The dollar was little changed against the euro and the yen today after world energy powers were unable to come up with a quick fix to rein in runaway oil prices at an emergency meeting over the weekend.
Although Saudi Arabia, the host of the meeting, vowed to pump more oil, traders said the meeting resulted in no remedies that would reverse the more than $40 surge in crude since the start of the year to record peaks.
Underscoring such views, US crude oil futures rose more than $1 a barrel today due to growing tension between Iran and Israel.
Such a rise in oil prices bodes ill for the dollar, said a trader for a major Japanese trading house. The Federal Reserve starts a two-day policy meeting tomorrow.
"The United States is in a dilemma, facing both the risks of inflation and an economic slowdown, so the moves in oil prices are likely to make their impact felt," the trader said.
Market players had been eyeing the weekend meeting closely because the dollar's slide has contributed to the surge in oil prices and global inflation pressures while also adding to the US economy's housing-led struggles.
In addition, the dollar has tended to fall when oil prices surge due to speculation that oil-producing countries may use the increased dollar-denominated windfall from crude exports to buy euros and other currencies to diversify their portfolios.
The dollar was steady from late US trading on Friday at 107.35 yen, staying below a four-month high of 108.59 yen hit last week.
The euro was little changed at $1.5612, but underpinned by expectations that the European Central Bank will raise interest rates by a quarter-percentage point to 4.25 percent in July.
The euro rose 0.1 percent to 167.59 yen, staying within sight of an 11-month high of 168.13 yen struck on trading platform EBS on Friday.