Ruble (USD/RUB) outlook ahead of the Bank of Russia rate decision

The USD/RUB exchange rate has retreated in the past three straight days as crude oil prices bounced back. The pair dropped to 93.48 on Tuesday, much lower than the year-to-date high of 102.16. 

Central Bank of Russia decision

The USD to Russian ruble exchange rate has retreated because of the rising price of crude oil. Brent, the international benchmark, has risen to $90 while West Texas Intermediate (WTI) has jumped to $87. Similarly, Russia’s urals, the country’s benchmark, has risen above $60 a barrel.

Crude oil price has risen because of the actions of Russia and Saudi Arabia to boost prices. The two countries, which are member states of OPEC+ decided to continue with the 1.3 million daily supply cuts. Their goal is to ensure that prices remain at an elevated level for longer.

Russia benefits from high oil prices since it leads to more foreign exchange. While western countries have sanctioned Russia, the country is still selling millions of barrels of oil every day.

The USD/RUB exchange rate also retreated after the Bank of Russia said that it would offload 150 billion worth of rubles ahead of a Eurobond payment scheduled for next month.

Looking ahead, there will be two important catalysts for the USDRUB exchange rate. First, as I wrote here, the US will publish the latest consumer price index (CPI) data on Wednesday. These numbers are expected to show that the country’s inflation rose slightly in August. The data will come a week ahead of next week’s Federal Reserve decision.

Second, the Central Bank of Russia will conclude its meeting on Friday and deliver its decision. Economists polled by Reuters expect the central bank will decide to leave interest rates unchanged at 12%. It recently pushed rates up sharply in an unscheduled decision as the Russian ruble plummeted.

USD/RUB technical analysis

USD/RUB chart by TradingView

The USD/RUB exchange rate has drifted downwards in the past few days. This sell-off happened after the pair retested the important resistance level at 100. A quick look shows that it has retested the 50-day moving average, which is an important support level. It has also retested the upper side of the Ichimoku cloud indicator.

Therefore, the outlook for the pair is still bullish, with the initial level to watch being at 100. A break above that price will see it retest the year-to-date high of 102.53. The alternative scenario is where the pair drops and retests the support at 90.