The blast could be heard across the Iraqi capital and triggered security sirens at the US embassy compound but did not cause casualties, the sources confirmed.

There was no immediate claim of responsibility.

It follows more than two dozen similar attacks against American interests in Iraq since October that the US has blamed on Iran-backed factions among Iraq's security forces.

The volleys of rockets, which have killed US, British and Iraqi armed personnel, have severely strained ties between Baghdad and Washington.

Tensions reached boiling point in January when the US killed Iranian general Qasem Soleimani and Iraqi commander Abu Mahdi al-Muhandis in a drone strike on Baghdad.

But the US and Iraq have hoped to reset the relationship since Prime Minister Mustafa al-Kadhemi took the helm earlier this month, with bilateral talks planned for June.

The negotiations are expected to set a framework for the presence of US troops, which deployed to Iraq in 2014 to lead a coalition fighting back the Islamic State group.

But the forces are a thorn in the side of Iran and its allies in Iraq, which have insisted they leave the country.

On Sunday, Iran's supreme leader Ayatollah Ali Khamenei said the US "will not be staying either in Iraq or Syria and must withdraw and will certainly be expelled".

The US-led coalition has already drawn down its 7,500-strong force in Iraq this year, citing a decreased threat from IS and difficulties training Iraqi forces due to the spread of the coronavirus.