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The USD/CAD pair extended its sideways consolidative price action through the early European session and remained confined in a range above mid-1.2400s. A combination of diverging forces failed to assist the USD/CAD pair to capitalize on Friday's modest bounce from two-and-half-week lows and led to a subdued trading action on the first day of a new week. The US dollar remained on the defensive amid dovish Fed expectations and capped the upside. However, a pullback in crude oil prices undermined the commodity-linked loonie and helped limit any losses, at least for now.

Investors now seem convinced that the Fed will wait for a longer period before slowing its massive monetary support. This, in turn, was seen as a key factor that continued acting as a headwind for the USD. Apart from this, the recent decline in the US Treasury bond yields, back closer to multi-month lows, along with the risk-on impulse in the market further undermined the greenback's relative safe-haven status.