* Dollar index at highest since November

* Energy-sensitive currencies such as euro under pressure

* US consumer spending, core PCE inflation firmer before

Iran war

* Traders bet on Fed rate cut by September

* Yen in intervention territory

(Updates to U.S. afternoon)

By Saqib Iqbal Ahmed

NEW YORK, March 13 (Reuters) - The U.S. dollar rose

against a basket of major currencies Friday, on track for a

second straight weekly gain, as the war in the Middle East drove

investors toward safe-haven assets and weighed on

energy-sensitive currencies such as the euro.

President Donald Trump said the U.S. was going to be hitting

Iran "very hard over the next week", shortly after issuing a

partial 30-day waiver for purchases of sanctioned Russian oil,

hoping to ease prices fuelled by the U.S.-Israeli war on Iran.

A sharp and prolonged rise in oil prices would severely hurt

the economies of Japan and the euro area, which are heavily

reliant on crude imports, while the United States would be

relatively insulated, having been a net crude exporter for

almost a decade.

"Global investors are unwinding cross-border exposures,

pushing money into safe havens, and punishing currencies issued

by net energy importers," said Karl Schamotta, chief market

strategist at Corpay in Toronto.

The euro was 0.4% lower against the dollar at

$1.1466. The dollar index, which measures the greenback's

strength against a basket of currencies, was up 0.4% at 100.10.

The index is up 1.1% for the week, its second consecutive weekly

gain.

Schamotta, however, warned that FX markets face two-way

risks.

"As the war drags on, both Tehran and Washington have strong

motivations for returning to the negotiating table and there are

good reasons to suspect they could strike a face-saving bargain

as soon as this weekend," said Schamotta.

INFLATION WATCH

Data on Friday showed U.S. consumer spending increased

slightly more than expected in January, which together with

continued strength in underlying inflation and the dragging war

in the Middle East bolstered economists' views that the Federal

Reserve would not resume cutting interest rates for some time.

"The latest personal consumption expenditures inflation data

tells us that the inflation picture wasn't looking good even

before the Middle East crisis," Sonu ‌Varghese, global macro

strategist at Carson Group, said in a note.

"An already large headache for the Federal Reserve is going

to turn into an even larger one, and it's likely the Fed will

not cut rates in 2026 and may even start talking about rate

hikes later this year," ‌Varghese said.

In the two weeks since the Iran conflict set off a surge in

oil prices, traders had pushed bets on a first Fed rate cut to

as late as December. On Friday, they were betting the Fed will

probably next cut interest rates in September.

EURO PAIN

Investors await the European Central Bank policy meeting

next Thursday, while traders bet that surging oil prices could

push the central bank to hike rates this year.

Still, economists remain wary of monetary tightening in

economies where dependence on fuel imports means surging energy

costs are likely to weigh on growth.

"It has become very clear that shipping through the Strait

of Hormuz could be affected for a while," Jane Foley, head of FX

strategy at Rabobank, said in a note.

"We have therefore reduced our EUR/USD forecasts on a 1- and

3-month view to 1.14 and 1.15 respectively from 1.16," she said.

YEN IN INTERVENTION TERRITORY

The yen slid up to 159.69 per dollar, the weakest

since July 2024, before paring losses to trade up 0.1% on the

day at 159.20 per dollar.

Japan is ready to take the necessary steps against yen moves

that impact people's lives, Finance Minister Satsuki Katayama

said on Friday, adding that she was in close contact with U.S.

authorities on foreign exchange issues.

"Policymakers are likely to take a dim view of the effect

that exchange rate weakness will have on already-soaring import

bills," Schamotta said, noting that pressure to intervene to

prop up the battered yen could increase in coming days and

weeks.

Leading cryptocurrency bitcoin rose 4.5% to $73,374,

a nine-day high.