USD/CAD stuck in a range below mid-1.2400s, US CPI awaited

• USD/CAD extended its sideways consolidative price move for the fourth straight day.
• Bullish crude oil prices underpinned the loonie and acted as a headwind for the pair.
• Investors, however, seemed reluctant to place aggressive bets ahead of the US CPI.

The USD/CAD pair lacked any firm directional bias and remained confined in a range, below mid-1.2400s heading into the European session.

The pair, so far, has struggled to gain any meaningful traction and has been oscillating in a narrow trading band since last Friday. The overnight spike to near one-month tops faded ahead of the key 1.2500 psychological mark amid bullish crude oil prices, which tend to underpin the commodity-linked loonie.

Apart from this, sustained US dollar selling also collaborated to cap the upside for the USD/CAD pair. That said, a pickup in the US Treasury bond yields, along with the risk-off impulse helped revive demand for the safe-haven USD and extended some support, warranting some caution for aggressive traders. 

Investors also preferred to wait on the sidelines ahead of Wednesday's release of the US consumer inflation figures. The Fed last week indicated that policymakers were in no rush to raise borrowing costs. Investors, however, seem convinced that the US central bank would be forced to adopt a more aggressive policy response to contain stubbornly high inflation.

The US CPI report, due for release later during the early North American session, will influence Fed rate hike expectations and drive the USD demand. This, in turn, should provide a fresh directional impetus to the USD/CAD pair. In the meantime, the pair is more likely to extended its subdued/range-bound price action.

Technical levels to watch