- The US dollar has fallen rather significantly over the last couple of days against the Russian ruble, kicking off the so-called “death cross” as the 50-Day EMA has broken below the 200-Day EMA.
- Because of this, I think you have a situation where market participants are now starting to potentially price in the idea that the Federal Reserve may cut rates later, but beyond that we also have to keep in mind that the market had originally shot straight up in the air several months back due to the idea that Russia was going to be punished for the conflict in Ukraine.
The reality is that the Russian economy has done quite well, and it now is becoming increasingly obvious that the “Global South” is starting to open up its eyes to the idea of getting away from the SWIFT system, thereby making the US dollar a little less attractive. Whether or not that gains any real traction remains to be seen, but clearly the reports of the death of the Russian economy and by extension the Russian ruble were greatly exaggerated.
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Is There Support Below?
Now we have to ask questions as to whether or not there is support below. It’s worth noting that we did bounce a bit from the 81 rubles level, but I think the real support is probably closer to the 80 rubles level as it is a large, round, psychologically significant figure. The market will obviously pay close attention to it, and if we were to break down below the 80 level, it’s very possible that we could drop rather significantly.
On the other hand, if we were to turn around and start rallying from here, recapturing the 88.50 rubles level would be a big victory, and a lot of people would start paying close attention. This would probably coincide with the strengthening US dollar around the world anyway, so it would make a lot of sense that the Russian ruble would not stand much of a chance against the greenback. That being said, it appears that Russia is not necessarily trying to escalate the war, so may be a bit of stability will also help the ruble as well.
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