Russian Ruble drops back to 95.00 as sour sentiment joins firmer yields

• Russian Ruble prints the first daily loss in four while bouncing off 11-week-old support line.
• Risk-off mood, upbeat Treasury bond yields trigger USD/RUB rebound.
• Geopolitical concerns about Russia keep Ruble on bear’s radar despite CBR’s solid defense.

Russian Ruble snaps a three-day losing streak as it bounces off short-term key technical supports to reclaim the 95.00 round figure early Thursday, near 95.30 by the press time. In doing so, the USD/RUB pair justifies the broad risk aversion and firmer Treasury bond yields, as well as takes clues from downbeat concerns surrounding Russia.

Russian Ruble returns to bear’s radar

Be it the sour sentiment or the firmer yields, not to forget the hawkish Fed concerns and mostly upbeat US data, the USD/RUB pair appears to have all it needs to rebound from the below-mentioned technical support. Adding strength to the corrective bounce is the market’s doubts about the Central Bank of Russian Federation’s (CBR) capacity to defend the Russian Ruble despite a heavy emergency rate hike.

It should be noted that the latest US Federal Reserve (Fed) monetary policy meeting minutes highlighted the policymakers’ discussion on the inflation pressure, despite marking a division on the rate hike decision. Also, the Minutes conveyed that most policymakers preferred supporting the battle against the ‘sticky’ inflation and favored hawkish bias about the US central bank’s next move, which in turn underpinned the US Dollar’s run-up to a multi-day high. While helping the markets to justify hawkish Fed bias, US Industrial Production traced upbeat Retail Sales figures. With this, the US Dollar Index (DXY) rose to the highest level in two months before retreating to 103.40 at the latest.

Apart from the hawkish Fed concerns, the geopolitical/economic woes emanating from China and Russia join the Fitch Ratings’ downward revision of the 10 developed economies’ medium-term growth projections to weigh on the sentiment and trigger the USD/RUB recovery.

Further, the US 10-year Treasury bond yields remain firmer at the highest level since October 2022 marked earlier in the day, around 4.30% by the press time. It should be noted that such a high level of bond coupons triggered fears of economic slowdown.

That said, the CBR called an emergency monetary policy meeting and lifted the benchmark rates by 350 basis points (bps) to 12.0% on Tuesday amid concerns that the central bank’s easy-money policies are responsible for the Ruble’s latest fall to the lowest level since March 2022, past 102.00.

Moving on, a light calendar may allow the USD/RUB buyers to take a breather and wait for more clues to extend the latest run-up, which in turn highlights the US weekly jobless claims and Philadelphia Fed Manufacturing Survey for August for a clear guide.

Russian Ruble Technical Analysis

Russia Ruble bears cheered Monday’s bearish Doji and overbought RSI (14) line to entertain the pair sellers so far during the week.

However, the 21-DMA and an upward-sloping support line from May 31, close to 94.20 and 93.90 in that order, restrict the immediate downside of the USD/RUB pair.

With this, the Russian Ruble is likely to revisit Monday’s bottom of around 97.00 but any further upside needs validation from the 100.00 psychological magnet.

Meanwhile, a downside break of 93.90 can quickly drag the USD/RUB pair toward the late July swing high surrounding 92.00.

Russian Ruble: Daily chart

Trend: Limited recovery expected