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The USD/CAD pair begins the new week on a slightly bullish note and appears to have snapped a four-day losing trend to a one-month low, touching 1.3315-1.3310 on Friday. During the Asian session, spot prices lacked bullish conviction and remained below the mid-1.3300s, necessitating caution before positioning for a further intraday appreciation move.

The price of crude oil continues to decline for the third consecutive day due to concerns that a global economic downturn will reduce fuel demand. In turn, this is viewed as undermining the commodity-linked Canadian dollar and operating as a tailwind for the USD/CAD pair, despite muted US Dollar (USD) price action capping the upside. In actuality, the Federal Reserve's (Fed) rate-hike path uncertainty hinders the USD's ability to capitalize on Friday's modest rebound from the monthly low.

Recall that the recent dovish rhetoric from a number of Fed officials fueled rumors of a June pause in the US central bank's year-long cycle of policy tightening. The markets continue to price in the possibility of another 25 basis point rate hike in July, which functions as a tailwind for the dollar and supports the USD/CAD pair. Traders appear hesitant and prefer to remain on the sidelines in advance of this week's key data/central bank event risks.

On Wednesday, the highly anticipated outcome of the two-day FOMC monetary policy meeting will be announced, which will be preceded on Tuesday by the release of the latest US consumer inflation data. In the interim, the Bank of Canada's (BoC) unexpected rate hike last week may continue to support the Canadian Dollar (CAD) and limit gains for the USD/CAD pair in the absence of market-moving economic data from the United States or Canada on Monday.

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