The USD/CAD pair moves toward 1.4190 in Monday’s North American session after bouncing from Friday’s two-month low of 1.4150. The pair gains traction as the US Dollar (USD) recovers, with the US Dollar Index (DXY) stabilizing near 106.60, also a two-month low. However, market activity remains subdued as US and Canadian equity markets are closed for President’s Day and Family Day, respectively.

Despite the Greenback’s modest rebound, its outlook remains uncertain. Investors have tempered their concerns over US President Donald Trump’s proposed reciprocal tariffs, which he hyped on Truth Social last week but failed to detail in Thursday’s announcement. Instead, Trump directed his economic team to draft a tariff plan on countries imposing duties on US imports.

On the data front, weaker-than-expected US Retail Sales figures have further pressured the USD. Consumer spending contracted by 0.9% in January, surpassing the projected 0.3% decline. The disappointing data suggests slowing consumer demand, which could influence the Federal Reserve’s policy outlook.

Meanwhile, the Canadian Dollar (CAD) is trading in a tight range as markets await the release of Canada’s Consumer Price Index (CPI) data on Tuesday. Economists expect a 0.1% monthly increase in headline inflation for January, following a 0.4% contraction in December. The CPI report will be key in shaping market expectations regarding the Bank of Canada’s (BoC) next rate decision in March. A softer-than-expected inflation print could increase the likelihood of a BoC rate cut, potentially supporting further upside in USD/CAD.

Trade Idea:

Consider buying USD/CAD on dips near 1.4160, targeting 1.4250, with a stop-loss below 1.4120. A weaker Canadian CPI print could push the pair higher.