USD/CAD Technical Setup Hinges on Post-PCE Dollar Reaction

Ahead of Wednesday's PCE inflation report, USD/CAD is consolidating as traders await a clearer directional catalyst. The broader dollar complex has been trading defensively following dovish FOMC minutes, a pattern likely to extend into the pair depending on how the inflation data lands relative to consensus.

A hotter-than-expected core PCE reading could trigger a near-term bounce in the dollar, pushing USD/CAD toward recent resistance zones tested in prior sessions. Conversely, a soft print would likely validate the recent bearish dollar bias, opening room for further downside continuation.

With momentum indicators still reacting to the FOMC-driven shift, this week's data event stands as the key trigger for confirming whether USD/CAD breaks its recent range or reverts back toward prior support.