USD/CAD remains stable above mid-1.3700, near its highest level since early May

• USD/CAD oscillates in a narrow band and is influenced by a combination of divergent forces.
• Traders scaled back their bets on the Fed rate cut in September after the upbeat US NFP, boosting the dollar.
• A slight rise in crude oil prices supports the loonie and limits further gains for the pair.

The USD/CAD pair is struggling to capitalize on the post-NFP rally and is oscillating between tepid gains and minor losses, just above the mid-1.3700 level during Monday's Asian session. The moderate price action is influenced by a combination of divergent forces, although the fundamental backdrop appears to be tilting in favor of bullish traders.

The US dollar (USD) climbs to a near four-week high following expectations that the Federal Reserve (Fed) will keep rates high for longer amid a still resilient US economy, supported by data on US employment figures stronger than expected on Friday. . Hawkish bets, meanwhile, continue to support high US Treasury yields, which, combined with the cautious market mood, act as a tailwind for the safe-haven greenback and the USD/CAD pair .

At the same time, crude oil prices have recovered and are looking to build on last week's rebound from their four-month low, amid comments from OPEC ministers according to which they would not increase supply if prices remained low. This, in turn, appears to support the commodity-linked loonie and cap the USD/CAD pair. Traders also appear reluctant to place aggressive directional bets ahead of this week's U.S. macroeconomic data and central bank event risks.

The latest US consumer inflation figures are due out on Wednesday and will be followed by the outcome of the FOMC's highly anticipated monetary policy decision. This will help investors determine when the Fed will likely begin its rate cut cycle, which should influence the dollar. Meanwhile, speculation about another rate cut by the Bank of Canada (BoC) next month could play a favorable role for the USD/CAD pair.