The USDRUB is trading higher on the day after the Bank of Russia cut its policy rate by 25 basis points from 6.25% to 6%. The accompanying statement by the bank also left the door open for further rate cuts in 2020, allowing the USDRUB to climb nearly 1% on the decision.
In the rate statement by the Russian central bank, it noted that “if the situation develops in line with the baseline forecast, the Bank of Russia holds open the prospect of a further key rate reduction at its upcoming meetings,” a clear dovish sign from the apex bank.
The bank also noted that it saw annual inflation at between 3.5% and 4% in 2020, and expected it to remain close to 4% further down the road.
The USDRUB is now trading at 63.841 as at the time of writing.
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Technical Outlook for USDRUB
The weekly chart for the USDRUB shows that the decision by the Bank of Russia has sent the USDRUB soaring from its weekly lows of 62.549 to its present levels. This move represents a bounce after the pullback from resistance, following the breakout from the falling wedge pattern. The candle has violated the resistance posed by the previous high of 9 December 2019 as well as the prior neckline of the June/July 2019 double bottom at 63.793.
If the price closes above this resistance with a 3% penetration to the upside, this sets up the USDRUB for further gains and could send the pair upwards, where it has the chance to target the 14 October, 11 November, 25 November and 2 December 2019 highs at 64.455. Further resistance lies at 65.620, and this resistance level could become available as a target if continuous upside on the pair breaches 64.455.
On the flip side, failure to break the current resistance or rejection at the 64.455 resistance line could lead to a pullback which tests 63.323 and 62.240 (previous double bottom troughs). 61.657 also remains a potential downside target if the greenback loses the momentum it has had all week against major currencies.
The weekly candle has formed a pinbar just above the resistance at 63.793. The candle remains in evolution until the end of trading for the week at 2100 GMT on Friday.
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