USD/CAD consolidates in a range, around mid-1.3200s

The USD/CAD pair extended its sideways consolidative price action through the early European session on Monday and remained confined in a narrow trading band, around mid-1.3200s.

A combination of diverging forces failed to assist the pair in building the previous session's strong intraday upsurge of nearly 100 pips, triggered by stellar US NFP report and dismal Canadian employment details.

Focus on trade developments, FOMC

The US dollar failed to capitalize on the post-NFP positive move and remained on the defensive amid persistent uncertainty over a potential US-China trade deal ahead of the December 15 news tariffs deadline.

On the other hand, the Canadian dollar was being weighed down by a modest pullback in crude oil prices, which eroded a part of Friday’s upsurge to 12-week tops on the back of bigger output cuts by OPEC and its allies.

It is worth reporting that Saudi Arabia has agreed to provide 400,000 bpd of additional cuts, beyond what was agreed during Friday’s meeting, if OPEC+ averaged its part of 1.7 million bpd through the first quarter of 2020.

The pair now seems to have entered a bullish consolidation phase as market participants now seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of the latest FOMC policy update.

The Fed is scheduled to announce its decision on Wednesday, which coupled with a duo of important US macro releases – consumer inflation figures and monthly retail sales data – will provide a fresh directional impetus to the major.

In the meantime, the pair seems more likely to continue with its subdued trading action, though the incoming trade-related headlines might continue to influence the USD price dynamics and produce some short-term trading opportunities.

Technical levels to watch