Oil revenue concerns and increasing tensions!
While concerns over Russian Oil and petroleum products restrictions and supply increase, and gas prices falling under $5, the Russian Ruble eased to its eight-month low against the USD, trading above 70 rubles per dollar. Concerns over the oil export revenues and the continuation of the war do not paint a bright future for the currency that had the best performance in 2022 among G20 currencies.
Recently Moscow has given signals for peace negotiations, but how much should we trust them? Since the war began, we have had these talks several times, and more than that, we had signals about the negotiations. Russian behavior after these signals shows that they want to pressure Ukraine to accept the loss of control over parts of their territories while, simultaneously, the Russian army is preparing for another attack. Foreign Minister Sergei Lavrov said that Moscow is looking for "demilitarization" and "denazification" of Ukraine, and officials in Kyiv are already aware of that, so it is up to Ukrainian authorities to fulfill them. Mr. Lavrov added that if Ukraine does not decide about that, the Russian army will decide on the issue.
While recently, international pressure on Russia increased, their economy started to show more weakening signals and struggle to fund its infrastructure upkeep. On the one hand, investors worry about the effects of the EU's upcoming ban on Russian petroleum products on global gasoline, diesel, and other supplies; on the other hand, Russian officials worry about its effect on their economy.
Looking at the condition in Ukraine and the positions of the two sides involved in the war destroys hopes for peace in the short term. Continuing the war means more costs for the Russian government. In contrast, the continuation of these conditions means the continuation and even increase of sanctions and more pressure on the Russian economy. Therefore, as long as the war continues, and after the initial shocks, a sudden decrease, and a sharp increase in the Ruble's value, Bulls seem to be controlling the USDRUB chart.
From the technical point of view, 68.68 is the critical support, and as long as it is trading above this level, we can eye on higher levels. Breaching under 68.68 can change the outlook, but a downtrend can start if USDRUB falls under 64.62.
