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• USD/CAD trades on a flat note around 1.4185 in Monday’s late American session. 
• Trump keeps the tariff drumbeat going, with autos targeted next. 
• The Canadian Consumer Price Index (CPI) inflation report will take center stage on Tuesday. 

The USD/CAD pair flat lines near 1.4185 during the late American session on Monday. The US Dollar Index (DXY) trades sideways amid the inactivity in the US markets due to the Washington’s Day holiday. Traders will keep an eye on the Canadian Consumer Price Index (CPI) inflation data, which is due later on Tuesday. 

On Friday, US President Donald Trump maintained his drumbeat of tariff threats, stating that taxes on autos will begin as soon as April 2. It was the latest in a series of trade measures he has announced since taking office for the second time. Investors will closely monitor the developments surrounding further tariff policies. Any signs of escalating trade tensions could boost the US Dollar (USD) against the Canadian Dollar (CAD). 

On the Loonie front, the Canadian CPI data will be in the spotlight on Tuesday. The headline CPI is expected to show an increase of 1.8% YoY in January. On a monthly basis, the CPI inflation is projected to rise to 0.1% in January from a decline of 0.4% in December. In case of a softer-than-expected inflation outcome, this could drag the CAD lower and create a tailwind for the pair. 

However, a rise in crude oil prices might help limit the commodity-linked Loonie’s losses. It's worth noting that Canada is the largest oil exporter to the United States (US), and higher crude oil prices tend to have a positive impact on the CAD value.

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