USD/CAD consolidates within previous ranges, with 1.3835 holding bulls

• The US Dollar keeps moving within a tight range above 1.3800 ahead of the US PCE Inflation release.
• Trade uncertainty and growing concerns about US debt are limiting the US Dollar's rallies.
• In Canada, GDP data is expected to show that the economy lost steam in the first quarter.

The US Dollar is clinging to minor gains on Friday, with price action wavering within previous day's ranges and the 4-hour RSI flat around the 50 level, which signals a lack of clear bias.

The Dollar whipsawed on Thursday before closing the day with a 0.2% decline, as a federal court paused a previous sentence from a lower court blocking most of the trade tariffs introduced by the US President Trump on April 2.

The decision dampened market enthusiasm for a normalisation of global trade and revived fears that higher prices for imported goods will boost inflation and slow down growth, leading to stagflation and posing a serious challenge for the Fed.

Trade uncertainty and debt woes are weighing on the USD

Recent data underscored those concerns. The US GDP confirmed that the economy contracted in the first quarter, and weekly Jobless Claims increased against expectations. This, coupled with a sweeping tax bill that is expected to boost an already high US debt, is expected to weigh on the USD in the mid-term.

The focus today is on the US PCE Prices Index release, which is expected to show some cooling in yearly inflation, 2.2% from 2.3% in March, while the core reading is seen easing to 2.5% from the previous 2.6%. Monthly inflation is seen picking up 0.1%, in both cases, after a flat reading in March.  

In Canada, the focus will be on the first quarter's GDP inflation figures, which are expected to show a slowdown to a 1.7% annualized growth from the previous quarter's 2.6% reading.