The US President Donald Trump says Iran "appears to be standing down" after it targeted air bases housing US forces in Iraq.
In an address from the White House, Trump said no Americans were harmed in Iranian missile attacks on military bases housing US troops in Iraq and suggested Washington might not carry out immediate retaliation.
The attacks on the Irbil and Al Asad bases came early on Wednesday morning local time.
Iran said it acted in retaliation after the assassination of top Iranian General Qasem Soleimani last week.
The US drone strike targeting him and Iran-backed militia figures in the Iraqi capital Baghdad was a major escalation amid already deteriorating relations between Iran and the US.
Iran's Supreme Leader Ali Khamenei described the missile attacks as a "slap in the face" for the US and called for an end to the American presence in the Middle East.
What did Trump say?
The US president has previously threatened military action against Iran if it were to target US personnel and bases. But he stopped short of this, saying the attack had caused no casualties.
"No Americans were harmed in last night's attack by the Iranian regime," he said.
Media captionThis footage, reportedly of the missile attack, was shown on Iranian state TV
He also said that "American strength, both military and economic, is the best deterrent".
"The fact that we have this great military and equipment, however, does not mean we have to use it."
"Iran appears to be standing down, which is a good thing for all parties concerned," he added.
Mr Trump also said the US would immediately impose additional financial and economic sanctions on Iran, which would remain until it "changed its behaviour".
"Iran must abandon its nuclear ambitions and end its support for terrorism," he said.
What happened in the missile attacks?
More than a dozen missiles launched from Iran struck two air bases in Irbil and Al Asad, west of Baghdad, at about 02:00 local time on Wednesday (22:30 GMT on Tuesday).
Which bases were targeted?
Several other missiles landed at some distance from the targets.
The attacks came just hours after the burial of Soleimani, who controlled Iran's proxy forces across the Middle East.
It was the most direct assault by Iran on the US since the seizing of the US embassy in Tehran in 1979.
Just hours after the missile strikes a Ukrainian airliner crashed in Iran shortly after take-off. There is no evidence that the two incidents are linked.
Several airlines have announced they are avoiding both Iranian and Iraqi airspace amid the rising tension.-BBC