USD/CAD struggles for a firm intraday direction, stuck in a range around 1.3400 mark

• USD/CAD oscillates in a narrow band and is influenced by a combination of diverging forces.
• A modest uptick in crude oil prices underpins the Loonie and acts as a headwind for the pair.
• A softer risk tone benefits the safe-haven greenback and helps limit any meaningful downside.
• Traders now look to Canadian consumer inflation and the US macro data for a fresh impetus.

The USD/CAD pair is struggling to gain any meaningful traction on Tuesday and oscillating in a narrow trading band through the Asian session. The pair is currently hovering around the 1.3400 mark, nearly unchanged for the day, and is influenced by a combination of diverging forces.

A modest uptick in crude oil prices underpins the commodity-linked Loonie and acts as a headwind for the USD/CAD pair. The negative factor, to a larger extent, is offset by some follow-through US Dollar buying, which, in turn, lends some support to the major and helps limit the downside, at least for the time being.

Data released earlier this Tuesday showed that China's economy grew at a better-than-expected pace in the fourth quarter. Furthermore, improving trends in Chinese Retail Sales and Industrial Production fueled optimism over an economic recovery in the world's largest crude importer and acts as a tailwind for oil prices.

That said, worries about a potential global recession keep a lid on any meaningful upside for the black liquid. Traders also seem reluctant and prefer to wait on the sidelines ahead of the monthly OPEC report, due later this Tuesday, which will be looked upon for any change in the demand forecast for the current year.

The US Dollar, on the other hand, attracts some haven flows amid the prevalent cautious market mood, though lacks bullish conviction amid hopes for a less aggressive policy tightening by the Fed. The mixed fundamental backdrop warrants some caution before positioning for a firm intraday direction for the USD/CAD pair.

Moving ahead, the focus shifts to Canadian consumer inflation figures, due for release later during the early North American session. This, along with oil price dynamics, might influence the Canadian Dollar. Apart from this, the Empire State Manufacturing Index from the US  should provide some impetus to the USD/CAD pair.

Technical levels to watch