- Summary:
- Despite the gains made today by the USD/RUB pair, the upside action appears capped at a critical resistance.
The USD/RUB has resumed its upward move, but this move has stalled at a key resistance level as the price action continues to trade within a limited range.
The USD/RUB pair had reacted heavily to the shock 150bps rate cut by the Russian Central Bank on Friday. This move exceeded the market expectations and sent interest rates back to the pre-war levels. This marked the 5th interest rate cut by the bank this year after the Ruble firmed against its peers and inflation cooled.
When the first sanctions hit, the Russian Central Bank had raised rates from 9.5% to 20%. Still, a series of measures designed to attract Ruble demand at the expense of the US Dollar and other currencies appear to have worked, pushing the USD/RUB from the 7 March peak at 154.25 to the present levels at just above 58.11. Moreover, a drop in annual inflation from 17.1% in May to 15.5% in June also gave the CBR some room to start cutting rates once more.
The CBR has also left the door open for further rate cuts in H2 2022, as it projects inflation to fall further to a low of 12% and between 5-7% in 2023. This prospect has capped gains on the USD/RUB, leaving the pair up by 0.33%.
USD/RUB Forecast
The pair now challenges the resistance at the 58.5621 price mark (16 June high). A break of this level is required to give the bulls access to the 60.9581 resistance mark. Above this level, 62.7625 and 64.4803 (8 July high) are additional price targets to the north.
On the flip side, the 55.5123 support level (22 July low) becomes an additional downside target if the price action gets rejected at the 58.5621 resistance mark. If the bulls fail to defend 55.5123, the pathway toward 53.8600 (20 July low) becomes more evident. Finally, an additional price target to the south at 51.6225 becomes the other harvest point for the bears if the price deterioration continues.
USD/RUB: 4-hour Chart
