The USD/CAD pair regains positive traction on Tuesday and climbs to over a one-week high, around the 1.4415 region, during the first half of the European session. Spot prices, however, remain confined in a familiar range held over the past month or so as traders opt to wait on the sidelines ahead of this week's key central bank event risks.

The Bank of Canada (BoC) is scheduled to announce its policy decision on Wednesday and is widely expected to cut interest rates by 25 basis points. This marks a big divergence in comparison to the broader market consensus that the Federal Reserve (Fed) will leave interest rates unchanged at the end of a two-day meeting the same day, which, in turn, is seen as a key factor acting as a tailwind for the USD/CAD pair. 

Apart from this, a solid US Dollar (USD) recovery from the lowest level since December 18 touched on Monday offers additional support to the currency pair. Investors remain worried that US President Donald Trump's protectionist policies would reignite inflationary pressures. This triggers a fresh leg up in the US Treasury bond yields and revives the USD demand, which, in turn, favors the USD/CAD bulls.

That said, a modest recovery in Crude Oil prices, from a nearly three-week trough set on Monday, helps limit losses for the commodity-linked Loonie and caps the USD/CAD pair. Traders now look forward to the US economic docket – featuring the release of Durable Goods Orders, the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index – for some impetus later during the US session.

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