The USD/RUB exchange rate is nearing a key psychological level as the Russian ruble comeback continues and the US dollar index (DXY) recoils. The pair dropped to a low of 92.50 on Monday and is hovering near the lowest level since August 17th of this year. It has slipped by almost 10% from the highest point this year.

The war in Ukraine is continuing with the two countries losing thousands of soldiers. While the war is far from over, there are signs that Russia is winning. For one, Russia still occupies over a fifth of Ukraine and its economy is holding well despite Western sanctions. Ukraine’s counter-offensive has stalled. 

Further, there are signs that Western countries are losing momentum of funding the war, which could take years to conclude. In the United States, a sizable number of Republicans have rejected calls to fund Ukraine.

Most importantly, Russia is benefiting from elevated crude oil prices. Brent stands at $85 while the West Texas Intermediate (WTI) sits at $80. Russia has managed to skirt the price control policies by western countries.

It is able to achieve that by using old tankers that are not tracked by Western countries. At the same time, Russia has been able to shift its oil and gas sales from Western countries to the likes of India and Russia.

As a result, analysts now believe that Russia will attain its budget deficit target of 2%. A few months ago, some Western countries expected its deficit to be between 5% and 6%. Russia’s oil revenue more than doubled in October from the previous month.

The Russian ruble is also doing well as investors react to the ongoing currency controls by Russian authorities. These controls mean that western companies exiting Russia are limited to how they will cash out. They can either sell their businesses in rubles or in foreign currencies. The latter option is longer and quite inefficient.

Further, the Russian economy is doing well, with the unemployment rate sitting at 3% while the MOEX index has been one of the top performers this year.

The Russian ruble has also jumped as the US dollar index (DXY) has pulled back following last week’s Fed decision and non-farm payrolls (NFP) data.

USD/RUB chart by TradingView

The daily chart shows that the USD to RUB exchange rate has moved downwards in the past few days. It has dropped below the lower side of the ascending channel, which is shown in red. The 25-day and 50-day moving averages have formed a bearish crossover pattern.

At the same time, the Relative Strength Index (RSI) and the Stochastic Oscillator have pointed downwards. This is a sign that the Russian ruble is gaining momentum. Therefore, the outlook for the pair is bearish, with the next point to watch being the psychological point at 90.

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