USD/CAD trades with positive bias around 1.4300; upside seems limited ahead of Canadian CPI

USD/CAD attracts some buyers on Tuesday, though it lacks follow-through. 

An uptick in Oil prices underpins the Loonie and caps the upside for the pair.

Canadian CPI eyed for some impetus ahead of the Fed decision on Wednesday. 

The USD/CAD pair edges higher during the Asian session on Tuesday and for now, seems to have snapped a two-day losing streak to over a one-week low, around the 1.4275 region touched the previous day. Spot prices now look to build on the intraday move up beyond the 1.4300 round figure, though the fundamental backdrop warrants some caution for bullish traders. 

The US Dollar (USD) stages a modest recovery from its lowest level since October 2024 amid some repositioning trade ahead of this week's key central bank event risks, which, in turn, is seen acting as a tailwind for the USD/CAD pair. Any meaningful USD appreciation, however, still seems elusive in the wake of the growing acceptance that the Federal Reserve (Fed) will cut interest rates several times this year. 

Meanwhile, Crude Oil prices remain close to a two-week top set on Monday amid the risk of a further escalation of tensions in the Middle East, which could impact supply. This, along with positive news coming out of the US-Canada trade talks last week should underpin the commodity-linked Loonie and contribute to capping the USD/CAD pair, warranting some caution for aggressive bullish traders. 

Traders might also refrain from placing aggressive bets and opt to wait for the outcome of the highly-anticipated two-day FOMC policy meeting, scheduled to be announced on Wednesday. In the meantime, traders on Tuesday will take cues from the release of the latest consumer inflation figures from Canada. This, along with second-tier US macro data, should provide some impetus to the USD/CAD pair.