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In the dying hours of trading in 2017, the Canadian dollar is extending its recovery. USD/CAD is around 1.2530, after having reached a low of 1.2514. This is an extension of the break below the critical 1.2630 level, a move that sent it to the lowest levels in two months.

The US dollar continues falling across the board, as it did throughout the week between Christmas and New Years. Yet the Canadian dollar also has a driver of its own: oil prices.

Following the issues with output in Libya, global prices of oil have been moving higher. It is also important to note that there is an inverse correlation between the value of the dollar and the price of oil. It is not a total coincidence that oil is rising when the dollar is falling.

Specifically today, WTI Crude Oil made a move above $60 and settles there. The high so far is $60.45 and it seems that prices will not fall at the last moment. The next resistance level is $62.

Here is the daily chart of WTI Crude Oil:

And what are the levels to watch for the C$? On its way down, the pair broke another level, 1.2540. The next line of support is only at 1.2435, which kept USD/CAD from falling to lower levels back in October. Even lower, we find 1.2330 and 1.22. On the topside, 1.2630 now switches to resistance.  

More:  CADJPY More Upside – Elliott Wave Analysis

Here is how it looks on the Dollar/CAD chart: