The US dollar is trading near the highest levels seen in several months against other major peers, its appeal as a safe haven fueled by growing concerns about soaring energy costs and its potential impact on the economic recovery global. At the time of writing, the DXY US Dollar Index is trading around 94.23.

Against the common currency, the greenback is trading near a 14-month high even as the dollar index has posted gains of 0.5% in the past two sessions. The safe haven value of the Japanese yen is holding up against the dollar, benefiting from the support of investor risk aversion.

The cautious mood came as crude oil prices hit the highest levels seen in seven years in previous sessions, even as natural gas prices hit an all-time high across Europe. In addition, coal prices among major exporters in world markets have also reached record highs in recent times. This has raised fears that energy costs may derail progress in economies recovering from the coronavirus crisis in recent months.

At the same time, risk aversion sentiment has also increased due to concerns about the ongoing negotiations over the US debt ceiling. However, US Senate Republican Mitch McConnell has said his party is ready to allow an extension of the federal debt ceiling until December, which could be seen as a slightly positive development.

Investors will now turn their attention to labor market data, with the release of the latest weekly jobless claims figures expected later today. However, most of the volatility in the US dollar will be generated tomorrow when the non-farm wage data for September is released.

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