In fact, the USD Index, which tracks the Greenback against a basket of currencies, surrenders its modest intraday gains amid the uncertainty over the Federal Reserve's (Fed) rate hike path. The mostly upbeat US NFP released on Friday revived bets for another 25 bps lift-off at the next FOMC meeting in May. Market participants, however, seem convinced that the Fed will cut rates in the second half of the year amid signs of slowing economic growth.

Expectations that the Fed is nearly done with its policy tightening lead to a fresh leg down in the US Treasury bond yields, which continue to act as a headwind for the buck and prompt fresh selling around the USD/CAD pair. The downside, however, seems cushioned as traders might refrain from placing aggressive bets ahead of the key central bank event risks - the Bank of Canada policy meeting and the release of the FOMC meeting minutes on Wednesday.

This week's US economic docket also features the release of the latest consumer inflation figures and monthly retail sales data, which will play a key role in influencing the USD and provide a fresh directional impetus to the USD/CAD pair. In the meantime, relatively thin liquidity conditions, in the wake of a holiday in most European markets, might hold back traders from placing aggressive bets and contributes to limiting losses for the major.