The Russian Ruble has staged a remarkable comeback this year. It is the best performing currencies against the US dollar this year. In 2014, it was one of the worst. One of the main reasons for the Ruble’s upsurge is the rebounding oil price we have seen of late. Today we are seeing another sharp relief rally in the oil market. Relief in that crude stocks did not grow as strongly last week as they had been since the turn of the year. Whether or not the market is overreacting to the news remains to be seen. But evidently, speculators are probably thinking that the worst days are behind us and thus expect to see an imminent drop in US oil output after months of falling rig counts. But if sanctions over Iranian oil are lifted then we are back to square one.
But the US dollar is still in a strong upward trend while the Russian economy is in deep trouble which could limit the upside in the RUB. Things could change very quickly and lead to another rally in the USD/RUB pair. Indeed, the USD/RUB is hovering inside a significant support area around 48.55 to 50.75. The lower end of this range corresponds with an old resistance-turned-support level and a bullish trend line, while the upper end is the 61.8% Fibonacci retracement level of the last significant upswing from the June 2014 low. Meanwhile the 200-day moving average comes in at 49.35 while the psychological support is at 50.
Thus for all these reasons, a potential rally could be on the cards soon. The key level of resistance to watch is at 53.50, the high from earlier in the week. Should this level break down the bulls may then target the downward-sloping trend line next. If however the USD/RUB does not respond to the abovementioned support area then the selling may continue over time towards the 45 handle or further lower still towards the 78.6% Fibonacci level at 43.10 before making its next move.