USD/RUB forecast: what next for the fragile Russian ruble?
The USD/RUB price soared to a record high as the Russia and Ukraine crisis escalated on Thursday. The pair rose to a high of 90, which was about 30% above the lowest level in November last year.
Russia invades UkraineCopy link to section
The Russian ruble crashed hard after Vladimir Putin announced a special operation in Ukraine. In a speech, he said that the operation was necessary to bring peace in Eastern Ukraine. Shortly afterward, the country’s military were seen moving into Ukraine, where they bombed some military bases.
Therefore, the USD/RUB declined because analysts expect that the new invasion will leave Russia more isolated. Western countries like the United States and the European Union are expected to announce crippling sanctions that will punish Putin himself.
Some of the proposed sanctions will target the country’s financial market and limit the trade of key parts to Russian companies.
While these sanctions will hit there are concerns about how far they will go since Russia has a $600 billion war chest that will buy Putin time. At the same time, there is a limited possibility that Putin will back down.
The pair also rose as investors rushed to the safety of the US dollar. Historically, investors tend to move to the safety of the greenback when there are significant risks. Indeed, the US dollar index has risen by more than 1%. It has jumped against both developed and emerging market currencies like the euro and South African rand.
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Further, the USD/RUB rose sharply as investors priced in more rate hikes in the United States. For one, the prices of most items are expected to keep rising because Russia is the leading seller of fertilizer, crude oil, natural gas, and wheat.
USD/RUB forecastCopy link to section
The daily chart shows that the USD/RUB pair jumped sharply on Thursday after the Ukrainian invasion. On the daily chart, the pair managed to move above the key resistance level at 78.6, which was the previous all-time high.
The pair also moved above the 25-day and 50-day moving averages. This is a sign that buyers are now in control. At the same time, the MACD moved above the neutral level.
Therefore, the pair will likely keep rising as bulls attempt to push it above the key resistance at 90.0. However, a pullback cannot be ruled out because these sanctions have already been priced in.