USD/RUB Recoils Ahead of Russian Central Bank Decision. What Next?

Summary:
• The USD/RUB price is hovering near its lowest level this year as the focus shifts to the upcoming rate decision by the Russian Central Bank.

The USD/RUB price is hovering near its lowest level this year as the focus shifts to the upcoming interest rate decision by the Russian Central Bank. The USD to ruble exchange rate is trading at 57, slightly above the YTD low of 50. This price is about 63% below the highest point this year, making the Russian ruble the best-performing currency this year.

Russian central bank rate cuts

The USD/RUB, EUR/RUB, and GBP/RUB have been in a strong bearish trend in the past few months amid the war in Ukraine. This performance provides more evidence that Russia has won, at least for now, against the sanctions imposed by western countries. 

The Russian ruble has won because of the Russian response to sanctions. For example, the government has blocked capital freight from the country by limiting the amount of money that is leaving. But, most importantly, the government boosted demand for the Russian ruble by forcing countries to buy gas using the ruble.

At the same time, western sanctions helped to boost the prices of oil and natural gas, which made the country since it is a net exporter of these commodities. It continued to sell its products to countries like India and China in substantial quantities. 

The next key catalyst for the USD/RUB will be the upcoming interest rate decision by the Russian central bank. Analysts expect the bank to slash interest rates by 50 to 9%. The bank has been cutting rates after it initially pushed them to 20%. 

USD/RUB forecast

The daily chart shows that the USD to RUB exchange rate has been in a strong bearish trend in the past few months. Its attempts to rebound this month fund a strong resistance at about 69.41. The pair is now slightly below the 25-day and 50-day moving averages, while the Relative Strength Index (RSI) has moved slightly below the neutral point at 50. 

Therefore, I suspect that the USD/RUB price will continue falling as sellers target the YTD low of about 50. However, a move above the resistance at 69.41 will signal that bulls have prevailed and invalidate the bearish view.