USD/RUB: Russian ruble is on the cusp of a bullish breakout

The Russian ruble has moved sideways in the past few days as the price of crude oil continued retreating. The USD/RUB exchange rate was trading at 89.76 on Tuesday, where it has been stuck at in the past few weeks. This price is about 12.45% below the highest point in 2023.

Crude oil price retreats

The USD to RUB exchange rate has remained in a consolidation phase as traders watch the ongoing energy prices retreat. Brent, the global benchmark, has retreated to $77 while West Texas Intermediate (WTI) has dropped to $72.50. Russian urals has moved below $60.

Crude oil prices declined as investors reacted to the decision by Saudi Arabia to cut prices in a bid to gain market share. This move will likely trigger other countries to lower prices in the next few months.

Crude oil is the most important commodity for Russia since it is the biggest export. The most recent data shows that the country is exporting over 3.34 million barrels a day and the country has pledged to continue with its export cuts to 500k in line with the OPEC+ deal.

Russia has managed to bypass sanctions placed by Western countries by selling its oil to Asian countries, primarily India and China. Also, the country’s oil shipments have continued to pass through the Red Sea even as the Houthi attacks continue.

Therefore, analysts believe that the Russian economy is doing better than expected. It expanded by 5.5% in the third quarter while the IMF estimates that it will expand by 1.1% in 2024. The unemployment rate remains low while industrial production is continuing.

The other important USD/RUB news this week will be the upcoming US consumer price index (CPI) data. Economists polled by Reuters expect the data to show that core inflation dropped to 3.8% in December while the headline CPI rose slightly to 3.2%.

These numbers, together with last week’s NFP report, will help to set the tone for the Federal Reserve. Economists have mixed opinions on when the Fed will start cutting rates. Some see it starting to cut rates in March while others see it starting in June.

USD/RUB technical analysis

USD/RUB chart by TradingView

The USD/RUB pair peaked at 102.53 in 2023 and then resumed the downward trend. It has now moved below the 50-day and 25-day moving averages. Most importantly, the pair has formed a symmetrical triangle pattern, which is shown in black. 

The Stochastic Momentum Index (SMI) and the Relative Strength Index (RSI) have moved to the neutral points. Therefore, the outlook for the pair is neutral with a bearish bias. If this happens, the next level to watch will be at 86.98, the lowest swing on November 21st.