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• USD/CAD holds below 1.4200 as the US Dollar gains ground temporarily.
• The outlook of the US Dollar is uncertain due to multiple headwinds.
• Investors await the Canadian CPI data, which will influence the BoC's monetary policy outlook.

The USD/CAD pair ticks higher to near 1.4190 in Monday’s North American session after rebounding from a two-month low of 1.4150, which it posted on Friday. The Loonie pair edges higher as the US Dollar (USD) gains ground, with the US Dollar Index (DXY) holding the two-month low of 106.60. Investors should brace for thin trading volume as the United States (US) and Canada equity markets are closed on account of Family Day and President's Day, respectively.

However, the outlook of the US Dollar is still uncertain as its safe-haven appeal has diminished, with investors seeing US President Donald Trump’s tariff agenda as less fearful than thought.

On Thursday, Donald Trump didn’t reveal a detailed reciprocal tariff plan and asked his teams to work on them. However, the hype from his tweet at Truth Social indicated that he is ready with the plan and will impose it as early as possible.

“Three great weeks, perhaps the best ever, but today is the big one: reciprocal tariffs!!! Make America great again!!!", Trump said in the early North American trading hours on Thursday.

On the economic data front, poor US Retail Sales data has also weighed on the US Dollar. The Retail Sales data, a key measure of consumer spending, declined at a faster-than-expected pace of 0.9% in January.

Meanwhile, the Canadian Dollar (CAD) is expected to perform sideways as investors await the Canadian Consumer Price Index (CPI) data for January, which will be released on Tuesday. Month-on-month headline CPI is estimated to have grown by 0.1% after deflating 0.4% in December. The inflation data will influence market speculation about whether the Bank of Canada (BoC) will cut interest rates again in the March policy meeting.

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