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[Middle East Conflict Escalates, Boosting Dollar; Yen Approaches Intervention Warning Line] 1. Affected by the latest round of US strikes against Iranian military facilities, geopolitical tensions in the Middle East have escalated again, with the dollar index reaching a high of 99.54 on Thursday, its highest level since April 8th. Meanwhile, the dollar/yen exchange rate is approaching the 160 mark, once again testing the Japanese authorities' resolve to intervene. 2. According to Iran's Tasnim News Agency, the Islamic Revolutionary Guard Corps stated that it has carried out retaliatory strikes against a US air force base after launching an attack near Bandar Abbas airport. The Kuwaiti military stated that its air defense system is intercepting missiles and drone threats from unidentified directions. Previously, the US military launched a new round of strikes against Iranian drone activity, claiming these activities pose a direct threat to US forces and commercial shipping in the Strait of Hormuz. 3. As markets become more pessimistic about the prospect of a quick resolution to the war, oil prices rebounded, and safe-haven demand supported a stable dollar. With persistently high energy prices, the Federal Reserve has shifted its policy focus to curbing inflation, and investors increasingly expect the dollar to strengthen further. 4. Alex Saunders, Global Head of Quantitative Macro Strategy at Citigroup, stated that geopolitical risks and their associated inflation remain the main market concern, and he expects previous underweight positions in the US dollar to be covered. 5. In the currency market, the euro fell as much as 0.34% against the dollar, hitting a one-week low of $1.1685, while the pound fell as much as 0.44% against the dollar to $1.3367, its lowest level since May 18. The risk-sensitive Australian dollar fell as much as 0.6% against the dollar to $0.7097, also a one-week low. 6. The market is currently focused on the Fed's preferred inflation gauge—the core personal consumption expenditures price index—to be released today, which will provide guidance for the broader interest rate outlook. 7. The dollar rose as much as 159.65 against the yen, a new high since April 30, approaching the 160 level that triggered intervention by Japanese authorities last month. IG market analyst Tony Sicamor pointed out that the last intervention bought policymakers some breathing room, but its long-term effects are questionable. He questioned whether the price of only a month's respite was worth it. If the exchange rate breaks through 160 again in the next few trading days, will the authorities be determined to intervene again with the same amount of funds? 8. Data from the London Stock Exchange Group shows that the market currently expects a 70% probability of the Bank of Japan raising interest rates by 25 basis points at its policy meeting on June 15-16.