USD/CAD is showing sideways movement, with spot prices currently trading around the 1.3840 level. The decline in crude oil prices to a three-week low, amid concerns that a full-scale trade war could trigger a global recession and reduce fuel demand, is weighing on the Canadian dollar, as Canada's economy heavily depends on oil exports. An increase in supply from OPEC+ could worsen the situation further, lowering demand, as several OPEC+ members have announced they will accelerate production growth for a second consecutive month in June.

In addition, the modest rise of the U.S. dollar is providing some tailwind for the USD/CAD pair. However, this rise lacks a clear catalyst other than pre-data anticipation ahead of key U.S. macroeconomic releases. Nonetheless, prospects for a more aggressive easing of Federal Reserve policy, supported by yesterday's disappointing U.S. economic reports, may deter traders from buying the U.S. dollar. Furthermore, the unstable actions of U.S. President Donald Trump regarding trade policy have recently led to a mass exodus of investors from American assets, which is also expected to limit the growth of both the U.S. dollar and the USD/CAD pair overall.

On the Canadian dollar side, the victory of the Liberal Party in the elections strengthens the position of the current government and Prime Minister Mark Carney in trade negotiations with the U.S., contributing to the stability of the Canadian dollar and further restraining the growth of the USD/CAD pair, demanding caution from the bulls.

For better trading opportunities this week, attention should be paid to upcoming releases such as the ADP private sector employment report, U.S. GDP and PCE data, which will have a significant market impact. In addition, today's economic calendar includes the release of Canada's monthly GDP report, which, together with oil price dynamics, will influence the Canadian currency and provide some momentum for the USD/CAD pair.

The above-mentioned mixed fundamental backdrop calls for caution before opening aggressive directional positions in either direction ahead of the news.

From a technical standpoint, the price movement within the current range can be classified as a consolidation phase. Given that oscillators on the daily chart remain deep in negative territory and far from oversold conditions, this favors the bears and suggests that the path of least resistance for USD/CAD is likely downward.