USD/CAD struggles for a firm intraday direction, stuck in a range below mid-1.3700s

• USD/CAD oscillates in a range and is influenced by a combination of diverging forces.
• The recent strong rally in Oil prices underpins the Loonie and caps gains for the major.
• Fed rate cut expectations keep the USD bulls on the defensive and act as a headwind.

The USD/CAD pair struggles to capitalize on the previous day's positive move and seesaws between tepid gains/minor losses, below mid-1.3700s during the Asian session on Friday. 

Crude Oil prices attract some dip-buying and remain on track to register strong weekly gains on the back of OPEC+ assurance to keep production low to support prices, which helped ease concerns about higher supplies. OPEC+ further clarified that any increase in production would be largely dependent on Oil prices and also maintained its annual demand growth forecast, citing improved prospects in the wake of eventual lowering in global interest rates. This, in turn, continues to lend support to the black liquid, which underpins the commodity-linked Loonie and acts as a headwind for the USD/CAD pair.

The US Dollar (USD), on the other hand, stalls its goodish rebound from the weekly low touched on Wednesday in the wake of expectations that the Federal Reserve (Fed) could start cutting interest rates as soon as September. The bets were lifted by this week's softer inflation figures, which dragged the US Treasury bond yields to their lowest level since April. This, in turn, keeps the USD bulls on the defensive and turns out to be another factor that contributes to capping gains for the USD/CAD pair.

Meanwhile, the Fed adopted a more hawkish tone at the conclusion of the June policy meeting on Wednesday and now sees only one interest rate cut in 2024. This could help limit the downside for the US bond yields and the Greenback, which is seen holding back traders from placing aggressive bearish bets around the USD/CAD pair. Traders now look to the release of the Preliminary Michigan US Consumer Sentiment Index, which, along with Oil price dynamics, should provide a fresh impetus.