USD/CAD lacks firm intraday direction, oscillates in a range around 1.3400 mark

The USD/CAD pair seesaws between tepid gains/minor losses heading into the North American session and is currently trading around the 1.3400 mark, nearly unchanged for the day.

A combination of supporting factors assisted the USD/CAD pair to attract some buyers near the 1.3350 area, though the intraday uptick is seen runing out of steam near the 1.3420 region. A modest pullback in Crude Oil prices undermines the commodity-linked Loonie and lends support to spot prices. Apart from this, a softer risk tone drives haven flows towards the US Dollar and acts as a tailwind for the major.

The attempted USD recovery from a seven-month low, meanwhile, remains capped in the wake of rising bets for a less aggressive policy tightening by the Fed. In fact, the markets now seem convinced that the US central bank will soften its hawkish stance amid signs of easing inflationary pressure. Furthermore, several FOMC members last week backed the case for a smaller 25 bps rate hike in February.

Given that the US markets are closed in observance of Martin Luther King Jr. Day, the aforementioned mixed fundamental backdrop holds back traders from placing aggressive bets around the USD/CAD pair. Traders also seem reluctant ahead of the release of Canadian consumer inflation data on Tuesday, which will be followed by the Producer Price Index and Retail Sales figures from the US on Wednesday.

In the meantime, traders on Monday will take cues from Oil price dynamics. Apart from this, the Bank of Canada's Business Outlook Survey report might influence the Canadian Dollar and contribute to producing short-term opportunities around the USD/CAD pair.

Technical levels to watch