USD/RUB: Russian ruble could make a 7% comeback soon

July 05, 2023 12:20 AM PDT | By Invezz

USD/RUB: Russian ruble could make a 7% comeback soon — Image source: Invezz

Russia-Ukraine war continues

The USD/RUB price has done well as investors react to the ongoing war in Ukraine. Ukraine launched several drone attacks in Moscow this week as the war continued. As expected, Russia condemned the attacks, forgetting the damage it has caused in Ukraine. Drone attacks in Kyiv have been common recently.

The implications of these drone attacks is that the war in Ukraine will continue in the foreseeable future. Besides, recent attempts by world leaders, including Africans and Chinese, to mediate have hit a wall.

The USD/RUB price jumped as investors reacted to the recent statements by the Russian central bank. In its July meeting, the bank decided to leave its interest rate unchanged at 7.5%, where it has been for several months.

It warned that the economy was facing a double whammy that could affect its recovery. First, there is a continuing worker shortage after many professionals left the country. Second, the government is increasing its borrowing to support its war efforts.

Recent data showed that Russia’s budget deficit is growing as commodity prices retreat. As a result, the government announced a major windfall tax to plug the deficit. It hopes that the new taxes wil help it raise over 300 billion rubles to fund the war.

On a positive side, energy prices are stabilizing, with Brent crude oil trading at $75 and natural gas bouncing back to $2.76. Gas price has jumped by ~25% in the past 30 days.

USD/RUB technical analysis

USD/RUB chart by TradingView

The USD to RUB price has made a spectacular comeback in the past few months. On the daily chart, the pair has moved above the 50-day and 25-day moving averages. It has managed to flip the important resistance level at 83.57 into a support.

The pair has also risen to the upper side of the ascending trend shown in orange. It is also stuck at the 38.2% Fibonacci Retracement level. Therefore, while the overall trend is bullish, there is a likelihood that the pair will retest the support at 83.57, ~7% below the current level.

The post USD/RUB: Russian ruble could make a 7% comeback soon appeared first on Invezz.

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