• USD/CAD struggles to gain any meaningful traction and is influenced by a combination of diverging forces.
• Dovish Fed expectations weigh on the USD; bets for a larger BoC rate cut keep the CAD bulls on the sidelines. 
• The setup warrants caution before positioning for an extension of last week’s recovery from a multi-month low.

The USD/CAD pair struggles to capitalize on last week's goodish recovery from its lowest level since March 8, albeit manages to hold above the 1.3500 psychological mark through the first half of the European session on Monday. 

The US Dollar (USD) selling bias remains unabated for the third straight day amid rising bets for a more aggressive policy easing by the Federal Reserve (Fed), which, in turn, is seen acting as a headwind for the USD/CAD pair. Meanwhile, rising geopolitical risks in the Middle East lend some support to Crude Oil prices and underpin the commodity-linked Loonie, further contributing to capping the currency pair. That said, expectations for a larger rate cut by the Bank of Canada (BoC) keep a lid on the Canadian Dollar (CAD) and limit the downside for spot prices. 

From a technical perspective, oscillators on the daily chart – though have been recovering from lower levels – are yet to confirm a positive bias and warrant some caution before positioning for any meaningful upside. Meanwhile, the USD/CAD pair now seems to have found acceptance above the 38.2% Fibonacci retracement level of the recent downfall from the monthly peak and is currently placed around the 200-hour Simple Moving Average (SMA). Any subsequent move-up is likely to attract fresh sellers near the 50% Fibo. level, around the 1.3535 area region.