USD/RUB snaps three-day uptrend to retest 66.00 as DXY renews monthly low

• USD/RUB retreats from 13-day high as bets on aggressive Fed actions recede.
• Risk-on mood, firmer oil prices also helps to consolidate CBR-inspired gains.
• Eurogroup meetings eyed amid fears of more sanctions on Russia.

USD/RUB takes offers to refresh the intraday low around 65.50, consolidating the post-CBR move amid broad US dollar weakness. In doing so, the Russian ruble (RUB) pair prints the first daily loss in four while reversing from the 13-day high, marked the previous day.

The US Dollar Index (DXY) renews its monthly low around 101.40 amid receding bets on the Fed’s aggressive rate hikes, especially after the recent softer inflation and growth numbers from the US. On Friday, the US Personal Consumption Expenditure (PCE) data came in mixed for April, mostly downbeat, as the Core PCE Price Index matched 4.9% YoY forecasts versus 5.2% prior. Further, Personal Income rose less than expected but the Personal Spending improved.

The upbeat headlines from China, suggesting a faster easing of the covid-impressed activity restrictions, also help markets to remain positive, which in turn weigh on USD/RUB prices. “Shanghai said on Sunday ‘unreasonable’ curbs on businesses will be removed from June 1, as it looks to lift its COVID-19 lockdown, while Beijing reopened parts of its public transport as well as some malls and other venues as infections stabilized,” said Reuters.

It’s worth noting that firmer oil prices help trigger the RUB’s recovery moves due to Moscow’s reliance on oil exports as the key export income. That said, WTI crude oil rises for the fourth consecutive day to challenge a two-month high surrounding $116.60, around $116.00 by the press time.

Looking forward, USD/RUB traders will pay attention to the qualitative catalysts amid bank holidays in the US. Among the key catalysts to watch is the Eurogroup meeting that is likely to unveil more sanctions on Russia. Also important are the Moscow-Kyiv tussles as the Russian Foreign Minister Sergey Lavrov said, “Liberation of Ukraine's Donbas is an unconditional priority for Moscow, and other areas should decide their own fate.”

On the other hand, the early draft of the Eurogroup discussions, read by Reuters, signaled the bloc’s resistance to more sanctions, the European Union (EU) Foreign Policy Chief Josep Borrell mentioned that they won't fail on the oil embargo in the next sanctions package against Russia. "There will be an agreement in the end, we will have deal on next sanctions package by Monday afternoon,” the policymaker adds.

Hence, the USD/RUB prices seem to have more downside to track. However, a light calendar limits immediate moves.

Technical analysis

USD/RUB rebound needs validation from the previous swing high, around 71.00, to challenge the 200-DMA level of 78.00, failing to do so could drag the quote towards the previous resistance line from late April, near 58.40 by the press time.