USD/RUB and Brent Analyses. Daunting Correlations

Ruble and Brent Fundamental Analysis

Throughout the past week, the ruble has been strengthening, in particular, against the backdrop of news from the start of Russian gas exports for rubles. It is noteworthy that the plan to release oil contributed to the decline in oil prices on the global market, but also weakened the dollar against the ruble.

By the end of last week, namely on the closing day of April 8 this year, the dollar against the ruble fell to 75.98 on the global market, according to IDC, and even to 75.087 on the Moscow Exchange. Brent oil continued to fall, falling below $99 per barrel, but managed to bounce back by the close of the markets and closed just above $102.

On April 11, the price of Brent oil fell by 2.9%, the ruble reacted negatively and lost a little more than 5% against the dollar.

The reason for this fall of the ruble was the publication in The Times of an article about the entry of Finland and Sweden into NATO. The fall of the ruble continued as the noise around this message increased. The market immediately reacted and judging by the dollar versus ruble and oil charts higher, the market expected an escalation of disagreement between the Alliance and Russia.

Historical Correlation and Recent Changes

Pay attention to the last two candles on the charts of the dollar against the ruble (above) and oil (below).

Under normal conditions, a healthy correlation between the price of oil and the ruble was as follows: the price of oil rises, the ruble strengthens. However, in this case we see a complete opposite, and this opposite is justified precisely by the aggravation of the conflict between Russia and NATO. Videos appeared on the network about the rapprochement of military forces near the borders of Finland, which stated that its air borders were violated several times by the Russian Air Force.

US Dollar, Ruble and Crude Oil Forecast

So far, uncertainty keeps the price of oil and the dollar in a very tight range, but the likelihood of growth in both assets remains quite high. The dollar, as well as the price of Brent oil, is at critical resistance, dollar against ruble at 85 and Brent 105. MACD and RSI on both daily USDRUB chart and daily Brent crude oil chart are bullish. If they close above these levels, the dollar will rise to 88.2 – 90 and Brent to 108 this week.