USD/RUB Slips Amid Ongoing US-Russia Tensions

The exchange rate of USD/RUB fluctuates due to the current US-Russia geopolitical tensions. The recent US military enforcement actions against Russian-flagged oil shipping have increased geopolitical pressure. Moscow’s rejection of a Ukraine peace proposal has reinforced risk aversion toward the rouble.

At the same time, strategic moves such as BRICS-Plus military exercises point to changing geopolitical alliances. This may pressure investor sentiment toward the rouble. This article covers the latest geopolitical developments and key fundamentals shaping USD/RUB, along with the technical outlook for the currency pair.

USD/RUB: Geopolitical Developments:

1. The U.S. seizure of a Russian-flagged oil Tankerin the Atlantic Ocean:
   The US took this step following White House signals that the US would continue to seize Venezuela-linked oil vessels. Especially, after President Donald Trump imposed what he described last month as a “complete blockade” on ships transporting oil for Caracas.
   These tensions can increase volatility in emerging-market currencies like the rouble. Moreover, the sentiment of risk-off typically strengthens the USD and weakens the RUB.
2. The U.S. Sanctions on the Russian Oil Buyers:
   On Thursday, the White House confirmed that President Trump has given the green light to a long-sought Russian sanctions bill. According to the Washington Post, Trump supports this legislation, which would punish countries that buy cheap Russian oil and support Putin’s war machine.
   The legislation would give Trump the leverage over countries like China, India, and Brazil to incentivize them to stop buying Russian oil. These sanctions restrict Russia’s ability to earn foreign exchange, weakening the rouble. The threat of expanding sanctions can deter investment and increase USD demand.

Key Economic and Fundamental Drivers of USD/RUB:

1. Russia’s economy is slowing with weak GDP growth due to higher taxes, lower oil revenues, and shrinking fiscal reserves. The weakening economy reduces investor confidence in the rouble weighening the USD/RUB.
2. Russia’s economy relies heavily on oil and gas exports, and lower global prices influence the USD/RUB rate.

The Technical Outlook for the USD/RUB:

The USD/RUB pair is currently trading near 78.30, indicating short-term bearish pressure. Price action shows a clear rejection at the 81.34 resistance level, followed by a steady decline. This suggests that sellers are regaining control.

The next key support is around 77.20, which would act as a potential support for the pair. The trend shows a corrective phase after a recent spike above 81.00. The RSI has dropped to around 24.7, which indicates an oversold condition. This suggests a short-term rebound or consolidation could occur before further downside continuation.

The MACD lines are below zero, reflecting a strong bearish momentum. In summary, USD/RUB is in a short-term downtrend with strong technical selling pressure, oversold RSI, and bearish MACD alignment.