USD/RUB: Russian ruble nears a golden cross pattern

    The Russian ruble is doing well. The USD/RUB exchange rate plunged to a low of 85.5470, its lowest swing since June 2023. It has plunged by almost 10% from the highest point level this year.

    BoR and Federal Reserve actions

    The USD/RUB has crashed hard after last week’s Federal Reserve and Bank of Russia’s interest rate decisions. 

    In its decision, the Fed decided to leave interest rates unchanged between 5.25% and 5.50%. It also signaled that it will hold rates higher for longer-than-expected since inflation has remained above the Fed’s target of 2.0%.

    I believe that the first rate cut will either happen in December or in the first quarter of 2025. The Fed will also avoid cutting rates before the election in November. Such a cut would likely be interpreted as election interference.

    Also, the country’s inflation is not falling faster enough. Data released last week showed that the headline consumer inflation dropped to 3.3% while the core CPI moved to 3.4%. These numbers are significantly higher than the Fed’s target of 2.0%.

    The USD/RUB pair has also slumped after the Bank of Russia decided to leave rates intact at 16%. In its statement, the bank noted that domestic demand was outstripping supply, which has led to higher inflation. 

    The central bank expects that inflation will move to its target of 4% in 2025 and then continue stabilising afterwards. The statement added:

    “Returning inflation to the target will require a significantly longer period of maintaining tight monetary conditions in the economy than it was forecast in April.”

    The USD to RUB pair also slumped after the Russian stock exchange decided to halt trading in dollars and euros after an escalation of western sanctions. This means that pricing of the euro will be more opaque going forward.

    USD/RUB technical analysis

    USD/RUB chart by TradingView

    The daily chart shows that the USD/RUB exchange rate topped at 95.37 and has now drifted downwards to the lowest point since 2023. 

    It has also moved below the crucial support level at 87.25, its lowest swing in November last year and January this year. Most importantly, the pair has formed a death cross chart pattern, which is a popular bearish sign.

    Therefore, the pair will likely continue falling, with the next point to watch being at 80, which is about 8.15% below the current level.

    The post USD/RUB: Russian ruble nears a golden cross pattern appeared first on Invezz

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