The announcement on Sunday by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, of output target cuts caused oil prices to jump by around 8 percent in early trade in Asia on Monday. Brent crude was last trading at $84.12 per barrel, up $4.21 or 5.3 percent.

OPEC+ had been expected at a meeting on Sunday to stick to cuts of 2 million barrels per day already in place until the end of 2023, but instead announced further output cuts of around 1.16 million bpd.

“A higher oil price will put pressure on global inflation and if we assume the banking turmoil continues to reside then the markets will increasingly focus on the inflation outlook,” said Mohamad Al-Saraf, Associate, FX and Rates Strategy at Danske Bank.

Markets are now pricing in around a 70 percent probability of the Fed hiking rates by a quarter point in May, from around 50 percent on Friday. But, by the end of the year, expectations are priced in for cuts of 40 basis points.

“With oil prices going up it could be a trigger to reverse Fed rate cut pricing,” Danske Bank’s Al-Saraf added.

The euro was last down 0.1 percent to $1.0835, after touching a one-week low of $1.0788 earlier in the session, while the dollar rose 0.5 percent to 133.57 Japanese yen, earlier hitting its highest level since March 17.

Sterling was at $1.2317, down 0.1 percent on the day, while the dollar rose 0.3 percent against the Swiss franc.

On Friday, a report from the US Commerce Department showed that the personal consumption expenditures price index rose 5.0 percent in February from a year earlier, slowing from a 5.3 percent increase in January. A measure of core inflation — seen as a better gauge of future price increases — came in a shade lower than expected at 4.6 percent.

Additional data also showed US consumer sentiment fell for the first time in four months in February on concerns of an impending recession, although the impact of the banking crisis was muted.

Focus this week will be on US activity data and Friday’s jobs report, although many markets will be closed for the Easter holiday.

“Any signs of weakness in the data will likely push dovish bets back higher after the recent big unwinding of rate-cut bets,” said Francesco Pesole, FX strategist at ING.

“Solid data and hawkish Fed comments may help reinforce May Fed hike expectations,” Pesole added, which he said could help build a floor in the dollar.

The risk-sensitive Australian dollar was last up 0.1 percent to $0.6693 ahead of a policy meeting at the Reserve Bank of Australia on Tuesday, with markets placing around an 85 percent chance the central bank will stand pat on interest rates after 10 interest rate hikes.

The kiwi slid 0.4 percent to $0.6230.

In cryptocurrencies, bitcoin was down 1 percent at $27,910. Ethereum last fell 0.2 percent to $1,792.