USD/CAD trades with positive bias above 1.4000, looks to Canadian CPI for fresh impetus

USD/CAD holds above 1.4000 and draws support from a combination of factors.

Bearish Crude Oil prices undermine the Loonie and act as a tailwind for the pair.

The emergence of fresh USD buying favors bulls ahead of the Canadian CPI print.

The USD/CAD pair finds some support near the 1.4000 psychological mark on Tuesday and for now, seems to have stalled its retracement slide from the highest level since May 2020. Traders, however, remain on the sidelines and keenly await the release of Canadian consumer inflation figures before placing fresh directional bets.

The headline Canadian Consumer Price Index (CPI) is estimated to rise by 0.3% in October and the yearly rate is anticipated to have increased from 1.6% in September to 1.9%. A softer-than-expected reading will reinforce market bets for another jumbo interest rate cut by the Bank of Canada (BoC) in December. This, in turn, might continue to weigh on the Canadian Dollar (CAD) and assist the USD/CAD pair to resume its recent well-established uptrend witnessed over the past two months or so.

Heading into the key data risk, signs that supply tightness was easing keep a lid on the overnight recovery in Crude Oil prices from over a two-month low and undermine the commodity-linked Loonie. Furthermore, expectations that US President-elect Donald Trump's policies will boost inflation and limit the scope for further interest rate cuts by the Federal Reserve (Fed) revive the US Dollar (USD) demand. These turn out to be key factors acting as a tailwind for the USD/CAD pair.