a two-week low recorded on Friday is still well within reach. Spot prices, on the other hand, are able to maintain above the crucial level of 1.3500 throughout the Asian session, however, they find it difficult to draw any significant purchases in the aftermath of a mild US Dollar (USD) weakness.

The safe-haven greenback remains on the back foot below its best level in more than six months, reached last week, due to a bullish risk tone supported by optimism expecting more stimulus from China. In addition, rising Crude Oil prices support the commodity-linked Loonie and help keep the USD/CAD pair under control. Hopes for a revival in gasoline consumption in China, the world’s largest importer of oil, operate as a tailwind for the dark liquid against worries about tighter global supply.

However, it appears that traders are hesitant to make strong bets against the USD and would rather stay out of the market before this week’s important central bank event. Following a two-day policy meeting that will begin on Wednesday, the Federal Reserve (Fed) is expected to announce that interest rates will remain steady. By the end of this year, the markets will still be factoring in the probability of one additional 25 bps lift-off. Consequently, the ensuing policy statement will be the main focus.

Investors will closely monitor Fed Chair Jerome Powell’s comments during the post-meeting press conference for additional hints about the direction of the Fed’s rate-hike programme, which will in turn have a significant impact on the dynamics of the short-term USD price movement. In the interim, because neither the US nor Canada released any important market-moving economic data on Monday, the downside for the USD/CAD pair is expected to remain cushioned.

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