The dollar index firmed 0.17% to 99.464, near its highest level since May 21

The dollar firmed to a one-week high on ‌Thursday after Middle East tensions rose following new U.S. strikes on Iran, while the yen softened toward a level that triggered central bank intervention last month.

Iran said it targeted a U.S. airbase after an attack on Iran, Tasnim news agency reported.

That followed news ⁠that U.S. carried out new attacks on Iranian targets that it said posed ​a threat to the country’s forces.

Oil prices rose and the safe-haven ​dollar steadied as hopes of a swift resolution to the war faded, with investors now increasingly expecting the U.S. dollar to break higher as the country’s central bank shifts its focus to battling inflation amid higher energy prices.

Geopolitics and the subsequent inflation ​risks remain a key concern, Alex Saunders, Citi’s head of global quant macro strategy, wrote. We continue to ​see a trim in the USD underweight.

The dollar index firmed 0.17% to 99.464, near its highest level since May 21.

Local markets will now look ahead to today’s release of the U.S. core ​PCE deflator, which will help ​shape the country’s ⁠interest rate outlook.

The euro was 0.2% lower at $1.1600, while the pound was down nearly 0.3% at $1.3392.

The risk-sensitive Australian ‌dollar ⁠softened 0.4% to $0.7111 to a one-week low, and the New Zealand dollar was down 0.3% at $0.58831.

The yen softened to as far as 159.610 per dollar on Thursday, the lowest since April 30 and within sight of the 160 level ​that triggered intervention by Japanese authorities last month.