At the moment, the USD/CAD pair is trading above the 200-day simple moving average (SMA). Spot prices have surpassed the key 1.4000 level.

Oil prices opened the new week with a strong bullish gap, partially offsetting last week's decline in response to the softer tone from US President Donald Trump regarding the threat of imposing 100% tariffs on imports from China. This has reduced fears of an escalating trade conflict between the two countries while simultaneously raising concerns about a slowdown in demand.

At the same time, the US dollar is attracting buyers, stabilizing the corrective decline that began on Friday, as risk sentiment challenges demand for safe-haven assets — despite expectations that the Federal Reserve will cut interest rates two more times this year. Furthermore, the ongoing US government shutdown is a factor contributing to "bearish" sentiment toward the dollar; nevertheless, the bulls have not left the stage.

These circumstances, in turn, act as a limiting factor for the growth of the USD/CAD pair. However, the prevailing uncertainty over trade issues may discourage traders from making aggressive moves in either direction.