USD/CAD struggles to capitalize on its modest intraday positive move on Tuesday

Adding to this, a modest uptick in Crude Oil prices underpins the commodity-linked Loonie and acts as a headwind for the USD/CAD pair. Despite the Federal Reserve's (Fed) hawkish outlook, signalling that borrowing costs may still need to rise as much as 50 bps by the end of this year, investors seem convinced that the US central bank is nearing the end of its year-ling rate-hiking cycle. This, in turn, keeps a lid on any meaningful upside for the Greenback.

The markets, however, are still pricing in another 25 bps lift-off at the July FOMC meeting, which triggers a fresh leg up in the US Treasury bond yields. This, along with a generally weaker tone around the equity markets, could lend some support to the safe-haven Greenback and help limit the downside for the USD/CAD pair, at least for the time being. The market sentiment remains fragile on the back of growing worries about a global economic slowdown, particularly in China. This, to a larger extent, overshadows an interest rate cut by the People’s Bank of China (PBoC), which tempers investors' appetite for riskier assets and could benefit the buck. Traders might also refrain from placing aggressive bets and prefer to move to the sidelines ahead of Fed Chair Jerome Powell's two-day congressional testimony, starting this Wednesday. Powell's comments will be closely scrutinized for fresh clues about the Fed's future rate-hike path, which, along with speeches by a slew of influential FOMC members, will play a key role in driving the USD demand this week. Traders this week will also confront the release of the flash PMI prints from the US. Apart from this, Oil price dynamics should contribute to producing some meaningful trading opportunities around the USD/CAD pair.