The USD/RUB, which has been seeing some increased volatility as a result of the impasse on sanctions between the US and Russia, will once more be in focus as the Central Bank of Russia (CBR) meets to decide interest rates. Analysts at MUFG Bank think that the CBR will raise rates by 25 bps to 4.75%, and release a hawkish trajectory for rates going forward.
According to MUFG, there are upside risks of 50bp as the CBR’s March rate hike of 25bps signaled the first step towards rate normalization in the medium term. The MUFG forecasts that higher inflation and a weaker external environment will cause the CBR to raise rates by 25bps at each of the next three meetings, with a target of 5.25% to be attained in July 2021, followed by a pause once inflationary pressures begin to ebb.
The 75.487 support level continues to hold firm after today’s bounce. However, the bounce has met resistance at the 76.511 resistance, having blown past a potential pitstop at 75.974. Bulls would need to exert pressure on this level to uncap it and open the way towards the recent highs at 77.582. Above this level, 78.195 becomes a new target, having been the site of a recent high on 6 April.
On the flip side, a decline below the 75.487 neckline support converts the pattern on the daily chart into a head and shoulders formation, with a projected measured move towards 73.919. This measured move would require the bears to take out the intervening barrier at 74.520.
