USD/CAD faces challenges despite lower Crude oil prices, edges lower to near 1.3480

• USD/CAD moves in a negative direction amid a stable US Dollar on Monday.
• The lower WTI price could have limited the advance of the Canadian Dollar.
• Traders await the Canadian CPI data to gain more cues on the country’s inflation.

USD/CAD moves lower to near 1.3480, paring back its recent gains during the European hours on Monday. The US Dollar (USD) suffered losses against the Canadian Dollar (CAD) as US Treasury yields pared back its daily advances on Friday. With United States (US) banks closed for Presidents’ Day and Canadian banks closed for Family Day, markets anticipate limited movement in the USD/CAD pair.

The USD/CAD pair soared on better-than-expected Producer Price Index (PPI) data from the United States on Friday. However, the pair lost the intraday gains after the San Francisco Federal Reserve (Fed) President Mary C. Daly’s remarks, stating that three rate cuts are a reasonable baseline for 2024.

Additionally, former Federal Reserve official James Bullard suggested that the Federal Reserve should contemplate reducing interest rates at its March meeting to prevent stifling economic activity due to higher rates.

The Canadian Dollar might have received downward pressure with Crude oil prices losing ground. West Texas Intermediate (WTI) oil price inches lower to near $77.70 per barrel, by the press time. Additionally, market participants are expected to closely monitor demand conditions in China after returning from the week-long holiday.

Tuesday will be crucial for the Loonie Dollar (CAD) with the release of the Consumer Price Index (CPI) by Statistics Canada. On the United States side, FOMC Minutes will be eyed on Thursday.