• USD/CAD remains confined in a narrow trading range through the Asian session on Friday.
• An uptick in Crude Oil prices underpins the Loonie and acts as a headwind amid a softer USD.
• Investors now look forward to the US Core PCE Price Index for a fresh directional impetus.

The USD/CAD pair struggles to gain any meaningful traction and oscillates in a narrow trading range, just below mid-1.3200s through the Asian session on Friday. Spot prices, however, manage to defend the 23.6% Fibonacci retracement level of the recent slide from the May swing high and for now, seem to have stalled the overnight retracement slide from a nearly two-week high.

Crude Oil prices consolidate the gains registered over the past two days and continues to underpin the commodity-linked Loonie. The US Dollar (USD), on the other hand, pulls back from its highest level since June 13 and turns out to be another factor acting as a headwind for the USD/CAD pair. However, concerns that a global economic downturn will dent fuel demand keep a lid on any meaningful upside for the black liquid. Apart from this, the Federal Reserve's (Fed) hawkish outlook lends some support to the buck and the major.

It is worth recalling that the Fed earlier this month signalled that borrowing costs may still need to rise as much as 50 bps by the end of this year. Adding to this, the upbeat US macro data released on Thursday gives the Fed another reason to continue raising interest rates and reaffirmed market bets for a 25 bps lift-off at the July FOMC meeting. Furthermore, Fed Chair Jerome Powell reiterated earlier this week that two rate increases are likely this year and also said that he does not see inflation coming down to the Fed's 2% target until 2025.

Hence, the market focus will remain glued to the US Core PCE Price Index - the Fed's preferred inflation gauge - due later during the early North American session. The crucial data will play a key role in influencing expectations about the US central bank's future rate-hike path. This, in turn, should drive the USD demand and determine the next leg of a directional move for the USD/CAD pair. Hence, it will be prudent to wait for strong follow-through buying before positioning for an extension of this week's goodish rebound from the YTD low