• USD/CAD surrenders its modest intraday gains and is pressured by a combination of factors.
• Rising oil prices underpin the Loonie and exert some pressure amid sustained USD selling.
• Investors now look forward to the crucial US CPI report before placing fresh directional bets.

The USD/CAD pair struggles to capitalize on its modest intraday gains and attracts some sellers in the vicinity of mid-1.3400s, or a fresh weekly high touched earlier this Thursday. The pair slides to the lower end of its daily trading range, though manages to hold above the 1.3400 mark heading into the North American session.

Crude oil prices scale higher for the second successive day amid the latest optimism over China's pivot away from its zero-COVID policy, which is expected to boost fuel demand. This, in turn, underpins the commodity-linked Loonie, which, along with the prevalent US Dollar selling bias, acts as a headwind for the USD/CAD pair.

In fact, the USD Index, which measures the greenback's performance against a basket of currencies, languishes near a seven-month low amid rising bets for a less aggressive policy tightening by the Fed. Investors now seem convinced that the Fed will soften its hawkish stance amid initial signs of easing inflationary pressures.

The prospects for smaller Fed rate hikes going forward keep the US Treasury bond yields depressed near a multi-week low and continue to weigh on the greenback. Apart from this, a generally positive tone around the equity markets and a strong pickup in demand for the JPY contribute to driving flows away from the safe-haven buck.

Market participants now look forward to the release of the US consumer inflation figures, which will play a key role in influencing the Fed's rate hike path. This, in turn, should drive the USD demand. Apart from this, oil price dynamics will be looked upon for some meaningful trading opportunities around the USD/CAD pair.

Technical levels to watch