USD/RUB jumps to 78.80 and gains almost 2% on increasing tensions in Eastern Europe

• The USD/RUB has gained 6.44% in the last three days.
• Separatist leaders sought recognition of Russian President Putin, which could undermine talks between Russian/US officials.
• USD/RUB Technical Outlook: Escalation of the conflict, could spur a jump towards 80.41, followed by 80.95.

The USD/RUB advances 1.54% during the North American session, trading at 78.81 at press time. Financial market mood seesaws courtesy of high tension in the Russia/Ukraine conflict, while investors left economic information and fundamentals side until the conflict resolution. The former caused a jump in crude oil prices, with Brent oil sitting at $92.03 per barrel, while Western Texas Intermediate (WTI) is trading at $90.78 per barrel.

Russia/Ukraine conflict updates

The latest developments in the Russia/Ukraine conflict keep uncertainty surrounding the markets. The Donetsk and Luhansk region leaders asked Russian President Vladimir Putin to recognize them as independent Republics when a Sputnik correspondent reported artillery fire “heard” at Donetsk airport.

In the meantime, Russia’s President Vladimir Putin said that Ukraine does not plan to fulfill the Minsk Agreement. As a result, Putin said that Russia ought to consider recognizing the independence of those two regions in Eastern Ukraine.

Analysts suggest that any recognition of the latter might also undermine the prospects of peace talks between Russian and US officials, to be held on February 24 in Geneva, as Russian Foreign Minister Lavrov commented that he plans to meet US Secretary of State Blinken

It is worth noting that Russian Banks imported USD 5 Billion in foreign currency in December, as it pre-empts a possible spike in demand for non-Rub banknotes.

Therefore, if a resolution fails to be achieved, that would be a headwind for the RUB. Also, sanctions imposed on Russia may spark a significant depreciation of the RUB vs. the USD, pushing the USD/RUB exchange rate towards January 2016 highs at 85.98.

USD/RUB Price Forecast: Technical outlook

The USD/RUB has rallied 6.44% in the last three days, threatening to reach the YTD high sitting at 80.41. Also, the weekly moving averages (WMAs) sit well below the exchange rate, in a bullish order, with the shorter time-frames above the longer time ones.

The USD/RUB first resistance would be the YTD high at 80.41. Breach of the latter would expose November’s 2020 highs around 80.95, and then March 2020 highs at 82.86.