The dollar extended gains against major currencies on Wednesday, as traders focused on global inflation trends while sceptical of a near-term de-escalation in the Iran war.While reports said the U.S. sent a 15-point plan for discussion to Tehran, Israel and Iran exchanged airstrikes.President Donald Trump said the U.S. was making progress in talks with Iran, but Tehran denied that direct negotiations have taken place, keeping investors on edge.The U.S. dollar index , measuring the greenback’s strength against a basket of six currencies, rose 0.23% to 99.41. The euro slipped 0.19% against the dollar to $1.1585, while the British pound fell 0.19% to $1.3387.Sterling found little support earlier from data showing British consumer price inflation held at an annual rate of 3% in February, unchanged from January’s rate, with inflation broadly expected to rise as the war in the Middle East pushes up prices.“The fact that the dollar is staying strong suggests that the FX market is taking a slightly different view than equities and bonds,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.“If we were looking at a real off ramp being found here, then we would see some of this premium in the dollar start to correct,” Osborne added.That contrasts with equities and oil where investors appear optimistic that a resolution may be in sight. Stocks advanced on Wednesday, with the S&P 500 up 0.8%, and global crude oil prices were last down 3.8% at $100.54 per barrel.Bond markets rebounded after a volatile week, with the yield on U.S. 10-year Treasury notes down 5.6 basis points at 4.336%.Against the yen , the U.S. dollar rose 0.23% to 159.05 yen. Minutes from the Bank of Japan’s January policy meeting showed many board members saw the need to keep raising interest rates without specifying the pace.The Australian dollar was last down 0.39% at $0.6966. Inflation data for February showed a 3.7% rise prior to the start of the Iran war, slightly lower than expected by analysts.Although markets still anticipate no change in U.S. interest rates this year, expectations of policy tightening are rising.Fed funds futures now imply a small chance of a 25-basis-point hike at the Federal Reserve’s December meeting, compared to a cut expected a week ago, CME Group’s FedWatch tool shows.“We are seeing early signs of a more hawkish tilt from central banks outside the Fed, particularly the ECB and BOJ, which should begin to narrow yield differentials at the margin,” said Joel Kruger, market strategist, LMAX Group in London.In cryptocurrencies, bitcoin rose 1.77% to $71,300.33, while ether was up 1.31% at $2,176.02.