The US dollar faces continued pressure against the ruble: When will USD/RUB bottom out?

Russia’s ruble performed strongly in 2024, with the USD/RUB exchange rate falling 35% from its high in November last year to the current level of 77.20. Behind this significant adjustment are multiple factors, and technical data suggest that further downside potential still exists.

Three Pillars Supporting Ruble Appreciation

Shift in Geopolitical Expectations

After Donald Trump was elected in 2024, market expectations for a resolution to the Ukraine-Russia conflict increased. Polymarket shows that the probability of a ceasefire by the end of 2026 has reached 46%. Once any peace agreement is reached, US sanctions on Russia are expected to be lifted, which would significantly benefit Russia’s economic outlook.

Russia Central Bank’s Interest Rate Advantage

The weakness of the USD/RUB exchange rate also reflects arbitrage opportunities. The Russian Central Bank has maintained the highest policy interest rate globally, although it was recently lowered from a higher level to 16% at the latest meeting, still well above other major economies. This offers attractive yields for forex traders who borrow cheap dollars and invest in high-yield ruble assets.

Domestic Currency Demand Gap and Central Bank Intervention

Due to international sanctions, domestic demand for foreign currencies in Russia has been suppressed, supporting the ruble’s strength. Meanwhile, the Russian Central Bank has been supplementing lost energy revenues by selling gold and RMB reserves—oil and gas income in the first 11 months of 2024 declined over 20% year-on-year. These policy interventions further reinforce the ruble’s upward trend.

Weakening US Dollar Index Background

The decline of the USD/RUB is also rooted in the overall weakening of the US dollar. The dollar index has fallen from a high of 110 in January to 96, currently stabilizing around 100. The market has already digested the expectation of a rate cut in 2026—The Federal Reserve has hinted at implementing a rate cut next year, and the dovish stance of the Trump administration’s policymakers could lead to a more aggressive rate-cut cycle. A dovish-leaning Federal Reserve puts pressure on the dollar.

Technical Bearish Signals

From the daily chart, USD/RUB faces obvious downward pressure. The pair has fallen from the double top at 113.75 to the current 77.20, with a recent decline from the high of 85.91. Key technical indicators show signs of weakness:

• Price remains below the 50-day and 100-day exponential moving averages
• A small double top pattern formed at 80.65
• The yearly low of 74 has not yet been tested

Market Outlook

Based on comprehensive technical and fundamental analysis, the probability of USD/RUB continuing to decline is high. As expectations for progress in Ukraine-Russia negotiations increase and the prospects for US sanctions being lifted become clearer, investors may accelerate selling USD positions. The yearly low of 74 will serve as a technical support target, with further breakthroughs potentially reaching deeper support zones.