USD/RUB back to pre-invasion levels; watch USD/PLN and USD/HUF

Eastern European EM pairs may be a good alternative to USD/RUB for the short-term trader.

FOREX 7

Yesterday, Ukraine President Zelensky said that if a security guarantee system works out, then Ukraine would agree to neutral status and would not have foreign military bases within its borders. In addition, Russia said that Ukraine can still join the EU, just not NATO.  As a result of the positive talks, Russia agreed to pullback their military operations near Kyiv.  There has also been talk of paying Rubles for natural gas that Germany receives from Russia.  Although this was immediately rejected by Germany, Russia is still trying to negotiate a path towards a payment in Rubles.  As a result of the positive talks between the two sides regarding the war, along with the possibility of receiving payment in Rubles for gas, USD/RUB has moved lower and is back towards levels not seen since before the invasion date.

20220330 usdrub 240

Source: Tradingview, Stone X

As we had discussed earlier in March, USD/RUB had a high correlation to some of the Eastern European Emerging Market currency pairs, such as the USD/PLN and USD/HUF. On a shorter, 240-minute timeframe, the correlation between USD/RUB and USD/PLN has been in and out of favor for the last 2 weeks.  However, the current correlation coefficient between the 2 pairs is +0.88.  A correlation of +1.00 means there is a perfect positive correlation and that the 2 pairs move in the same direction 100% of the time. Any reading above +0.80 is considered strong.  USD/PLN hasn’t quite reached the breakout point on the day of the invasion at 4.0505.  Horizontal support between the breakout level and current levels is at 4.1002. However, notice that the RSI has moved into oversold territory (below 30.00), an indication that USD/PLN may be ready to bounce.  Resistance sits above at today’s highs near 4.2020, then horizontal resistance at 4.2587.  Above there, resistance is at the previous all-time high (before the war) at 4.3078.

20220330 usdpln 240

Source: Tradingview, Stone X

The chart of USD/HUF is similar to that of USD/PLN.  On the 240-minute timeframe, USD/HUF and USD/RUB currently have a correlation coefficient of +0.88.  In addition, USD/HUF has also pulled back towards the breakout point from before the invasion, however, it still has room to go.   Horizontal support sits at 323.608, just above the breakout point on February 24th at 319.56.  Notice that the RSI has just moved into oversold territory.  Therefore, the pair may be ready for a bounce.  Horizontal resistance sits above at 333.52.  The next resistance level is the previous all-time high (before the war) at 341.258.

20220330 usdhuf 240

Source: Tradingview, Stone X

USD/RUB is back to levels not seen since the start of the war.  However, its EM partners still have room to return to their breakout points.  On the shorter 240-minute timeframe, the correlation is strong. Therefore, if one doesn’t have access to trade USD/RUB, the Eastern European EMs may be a good alternative for the short-term trader.

 

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account