USD/RUB Price Forecast Q4 2020: Is the Rubble Heading for Record Highs?
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- Technical Analysis
- The price has left the 20 SMA behind since October
Russia is one of the 5 emerging markets in the BRICK group, which has had a major positive trade deficit for a long time. Yet, the Russian ruble has been trading on a long-term bearish trend. The USD/RUB was trading at around 6 in the late 1990s, but the crisis in Russia during that time sent it surging to 30. The 2008 global financial crisis sent the ruble further down, while the major crash came during the 2014-16 period, as crude oil entered a bearish trend, sending the USD/RUB above 85.
After a consolidation for two years, the decline resumed again at the beginning of this year, as oil prices were crashing lower due to the coronavirus outbreak in China, lowering the demand. The USD/RUB surged 20 cents higher and retraced lower, but we are now back where we were in March, despite the extreme weakness of the USD during this time, which sent all currencies up against the USD. This is a strong bearish signal for the ruble, so both the technical analysis and the fundamentals point to further weakness in the ruble, with the USD/RUB bound to break all time highs at some point, as the bullish trend continues.
Current USD/RUB Price: $
Recent Changes in the USD/RUB Price
|Period||Change ($)||Change %|
|30 Days||-$ 1.09||-1.4%|
|6 Months||+$ 2.40||+3.2%|
|1 Year||+$ 12.64||+18.9%|
|5 Years||+$ 13.05||+20.6%|
|Since 2000||+$ 49.55||+182.7%|
Factors Affecting the USD/RUB
There are a number of factors that affect the Russian ruble and even more so the USD/RUB. Oil prices are a main factor for the ruble, since Russia is a major exporter of oil and gas, and government revenues rely heavily on exports. The commodities are also a factor, as Russia also exports large quantities of raw materials and minerals, which are not painting a positive picture either. The Central Bank of Russia (CBR) has lowered interest rates to 4%, which is pretty high, but the lowest they have ever been in Russia. The US elections are another major event affecting the other side of the coin, as is the coronavirus situation.
|GBP/USD Forecast Q4 2020: 73||GBP/USD Forecast 1 Year: 1.25-26||GBP/USD Forecast 3 Years: 0.55-0.60|
|Price Drivers: US elections, Risk sentiment, Oil price, Technical analysis||Price Drivers: Russian geopolitics, Politics in the US, Both Economies, Global economic sentiment||Price Drivers: Fundamentals in both countries, Technicals, Commodity prices|
USD/RUB Price Prediction for the Next 5 Years
Recent Developments for the USD/RUB
Russia is a massive country, with plenty of raw materials and commodity reserves. A large amount of the country’s revenue comes from exports of such materials. But, raw materials and commodities have been mostly bearish for more than a decade. Crude oil and natural liquid gas, in particular, have been on a long-term bearish trend, lowering the revenue for Russia, especially earlier this year when crude oil tumbled lower and the USD/RUB surged 20 cents higher.
Crude Oil has been increasing since April, and the USD has been quite bearish since then, forcing the USD/RUB to pull back lower from April to June, but the price bounced back up again, suggesting that the sentiment is even more bearish for the ruble than for the USD. This is a major thing, suggesting that the USD/RUB will be even more bullish when oil stops climbing and the USD decline ends.
The coronavirus situation hasn’t helped either. Crude oil has been bullish since April, but the global economy has been suffering this year, and Europe and other places are contracting again, as the coronavirus restrictions increase. This means a lower demand for commodities and raw materials, and thus lower foreign currency revenue for Russia, which won’t help the ruble. The geopolitical factors affecting Russia, such as the situation in Ukraine, the Armenia-Azerbaijan conflict and the protests in Belarus, also have some negative impact on the ruble, but they are not fundamental. So overall, most fundamental factors point downwards for the ruble, and higher for the USD/RUB in the coming months.
USD/RUB Technical Analysis – The Uptrend Continues, as the Price Bounces off MAs
The USD/RUB was trading at around 2 in the early 90s. Then, it climbed higher, reaching 6 by 1998, with the 20 SMA (gray) holding as support. The price surged to 25 that year, due to the crisis in Russia. From that year until 2014, the USD/RUB was consolidating with a slight bullish bias, apart from the jump in 2008 during the financial crisis. But in 2014 the crude oil price started declining, pulling the ruble down as well, while the USD/RUB surged higher, to 80. The price pulled back in Q2 of 2015, but after forming a hammer candlestick in May that year, which is a bullish reversing signal after the retrace, the bullish trend resumed again, and buyers pushed to 86.
The price bounced off the 20 SMA early this year
However, the surge ended in early 2016 and after an upside-down doji candlestick, which is a bearish reversing signal, the USD/RUB pulled back. But, the 50 SMA (yellow) was catching up with the price and the retrace lower ended above that moving average. The 50 SMA provided support again in January this year, as oil was crashing lower, and this forex pair bounced off that moving average, surging from 60 to 83 until the middle of March. But the decline in oil stopped in April and turned quite bullish until September, while the USD turned massively dovish, sending the USD/RUB lower. But the decline ended at the 20 SMA (gray) on the monthly chart, after forming a hammer candlestick above that, which is a bullish reversing signal.
The 20 SMA will probably turn into support for USD/RUB
The uptrend is also visible on the weekly chart, with the ascending trend line forming at the bottom of the three major pullbacks lower. This shows that buyers are getting in earlier each time the USD/RUB pulls down. The 200 SMA (purple) has also helped. What’s more interesting is the upside bias since June, while oil was climbing and the USD was extremely bearish. This suggests that the ruble has been even more bearish than the USD and this pair will surge higher once the USD comes back, probably after the US elections. So, we are predicting that the previous highs will be broken in this pair, and the bullish momentum will continue once this latest retrace ends, probably at the 20 SMA on the weekly chart.