Canadian Dollar consolidates around 1.3800 against USD as Mideast uncertainties persist

The USD/CAD pair extends its sideways consolidative price move for the second consecutive day and trades around the 1.3800 mark during the Asian session on Tuesday. Spot prices, however, remain close to the highest level since April 13, touched last week.

The US Dollar (USD) attracts fresh buyers following the previous day's fall to over a one-week low amid persistent geopolitical uncertainties and acts as a tailwind for the USD/CAD pair. The US and Iran remained at odds over key issues, including the Strait of Hormuz and Tehran's nuclear program, capping the optimism over a potential deal to end a nearly three-month-old war and benefiting the safe-haven buck.

In the latest development, Fox News reported that US forces ‌conducted "self-defense strikes" in southern Iran on Monday. This keeps geopolitical risks in play, which, along with hawkish US Federal Reserve (Fed) expectations, offers some support to the Greenback. However, a modest recovery in Crude Oil prices underpins the commodity-linked Loonie and holds back bulls from placing fresh bets on the USD/CAD pair.

Hence, it will be prudent to wait for a sustained strength and acceptance above a technically significant 200-day Simple Moving Average (SMA) before traders start positioning for an extension of the recent move up from the monthly swing low. Moving ahead, Tuesday's release of the Conference Board's US Consumer Confidence Index might influence the USD price dynamics and provide some impetus to the USD/CAD pair.

The market focus, however, will remain glued to the US Personal Consumption Expenditure (PCE) Price Index and the second estimate of the US GDP growth, due for release on Thursday. Apart from this, fresh developments surrounding the Middle East crisis might continue to infuse volatility in the financial markets and contribute to producing some meaningful trading opportunities around the USD/CAD pair.