USD/RUB Signal: Is the Russian Ruble Rally Over or Just Starting?

The USD/RUB moved sideways as investors watched the ongoing trends in the energy market and geopolitics. The USD to RUB exchange rate was trading at 59.91, where it has been in the past few days. This price has risen by about 20% from the lowest level in June and is 61% below the year-to-date high.

Crude oil and natural gas prices

The USD/RUB price has been under intense pressure in the past few months as investors focus on the recent trends in the energy market. While oil prices have retreated slightly, analysts believe that they could soon bounce back.

OPEC energy ministers seem committed to keep oil prices at elevated levels. In an interview with Bloomberg, Saudi’s oil minister hinted that the cartel will likely lower production in the coming months. These members, including Russia, benefit when oil prices are high. For example, Russia is exporting ovr 8.2 million barrels of oil every day.

Meanwhile, analysts expect that natural gas prices will remain at elevated levels. Early indications are that Russia will completely slash its gas exports to Europe as winter approaches. Such a move will lead to higher gas prices in the region. In addition, Russia has secured several alternative markets for its gas.

The USD/RUB exchange rate has wavered as investors react to last week’s FOMC minutes and subsequent statements by Fed officials. The minutes showed that the bank was committed to continuing hiking interest rates in the coming months. In a separate statement on Tuesday, Fed’s Neel Kashkari said that the bank should keep hiking until it sees clear signs that inflation is indeed coming down. He said:

So with inflation this high for me, I’m in the mode of wanting to err on making sure we’re getting inflation down and only relax when we see compelling evidence that inflation is well on its way back down to 2%.”

USD/RUB forecast

The daily chart shows that the USD to RUB exchange rate surged after Russia invaded Ukraine. It rose to a high of 154.75 as countries imposed sanctions on Russia. The pair then declined sharply to a low of 50 as the Russian central bank intervened. The Russian ruble also did well because of the elevated oil and gas prices.

USDRUB price retested the important resistance at 69.28, which was the lowest point in October last year. It is also along the 25-day and 50-day moving averages. Therefore, the outlook for the pair is currently neutral with a bearish bias. If this happens, the next key support level to watch will be at 54.23, which was the lowest point in July. A move above 69.28 will invalidate the bearish view.