USD/RUB is finally showing some sign of weakness, as the pair had a 0.86% pullback on Wednesday. The pair stood at 99.23 before the start of the London session. The latest analysis suggests that the US dollar to Russian ruble exchange rate might be close to forming a local top.
USDRUB closed at 100.0958, which was the highest level for the pair since March 2022. On Wednesday, the pair slid to 99.23 amid a pullback in the US dollar. There are also some signs of a double top formation on the daily chart, which is discussed below.
In its efforts to combat inflation, Russia recently hiked interest rates by 100 bps points last month. The latest rate hike came shortly after an emergency 350 bps hike. However, the impact of this rate hike seems to have faded now as the Russian Ruble fell to its lowest level in the last 18 months. The sanctions are also hindering foreign investments, making things tough for the Russian currency.
Another factor contributing to the tailwinds of the USD/RUB is the soaring dollar strength (DXY) index and the surging bond yield. Analysts are expecting a prolonged tightening cycle without any rate cuts before the second half of 2024.
The daily chart of USDRUB shows a constant uptrend since June 2022. During this time, the pair has surged 96%. Just like the West, the Russian economy is also facing strong headwinds from the soaring inflation. However, the sanctions have worsened the impact on Russia.
While the USD/RUB forecast is still bullish, the bearish divergence on the daily RSI is pointing towards a major pullback. The chart shows a supply zone around the 101-102 level, which is very close to the 0.5 fib retracement level. After a rejection from this zone in August, the pair is once again retesting it.
This post was last modified on Oct 04, 2023, 09:56 BST 09:56