After gaining during the Asian session, USD/CAD has stalled, trading below the 1.4260 level.

This decline comes amid a slight weakening of the U.S. dollar.

Recent weak macroeconomic data from the U.S., particularly preliminary PMI indices, showed that private sector business activity in February fell to a 17-month low. This reinforced expectations of potential Federal Reserve rate cuts later this year, weighing on the U.S. dollar index.

Additionally, the recovery in crude oil prices is supporting the Canadian dollar, exerting further downward pressure on USD/CAD.

Fundamental Factors Driving the Pair

The increase in consumer inflation in Canada has led investors to reconsider their expectations regarding a potential rate cut by the Bank of Canada at its next March 12 meeting. This factor bolsters the Canadian dollar and contributes to the bearish sentiment surrounding USD/CAD.

However, concerns over the economic impact of the tariffs imposed by U.S. President Donald Trump may limit aggressive buying of the Canadian dollar. Trump confirmed that tariffs on imports from Canada and Mexico will take effect on March 4, adding a layer of uncertainty to market sentiment.

Key Catalysts for USD/CAD Today

Traders should focus on the release of the U.S. Consumer Confidence Index, which, along with speeches from FOMC members, could influence the U.S. dollar and provide new momentum for USD/CAD.

Additionally, crude oil price movements could create short-term trading opportunities during the U.S. session.

Technical Outlook

From a technical perspective, oscillators on the daily chart remain firmly in negative territory, suggesting that the path of least resistance for USD/CAD is to the downside.