Should you sell the USD/RUB after the Biden-Putin call?
- The USD/RUB pair declined sharply after the Biden and Putin call.
- The two leaders discussed the recent tensions on Ukraine.
- Biden warned that the US could apply sanctions if the crisis continues.
The USD/RUB price tilted lower on Wednesday as investors reflected on Tuesday’s call between Joe Biden and Vladimir Putin. The pair declined to a low of 73.70, which is about 3% below the highest level this week.
US and Russia tensions
Tensions between the United States and Russia have been rising in the past few weeks. The main issue is that the US has accused Russia of trying to attack Ukraine. It has cited the growing presence of the country’s military near Ukraine’s border. Russia has denied that it wants to invade the country as it did a few years ago.
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The root of these tensions is that the US and its western allies have continued to pull Ukraine to join the NATO alliance. This is an alliance that was formed to defend western countries against the Soviet Union. Therefore, Russia feels unsafe having a neighbour who is a member of NATO.
Vladimir Putin and Joe Biden held a two-hour video conference on Tuesday to try and address the issue. According to the two countries, Russia denied America’s claims. At the same time, the US threatened additional sanctions if the country attacked Ukraine.
Also, the country said that it will sanction the Nordstream 2 gas project. Therefore, the Russian ruble is rising because investors expect that tensions have eased slightly.
The USD/RUB has also risen because of the rising crude oil prices. In the past few days, the price of Brent and West Texas Intermediate (WTI) has jumped sharply as the worries of the Omicron variant ease. The Russian ruble does well when oil prices are high because of the volume of oil that it ships abroad.
USD/RUB technical analysis
The daily chart shows that the USD/RUB has been in a bearish trend in the past few days. The pair has moved from a high of 75.86 to a low of about 74. It has also moved to the 50% Fibonacci retracement level. Also, it is still above the 25-day and 50-day moving averages.
Therefore, the pair will likely keep falling as bears target the next key support at 73. However, the pair could show some volatility in the coming weeks because of the tensions between western countries and Russia.
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