• USD/RUB braces for the second weekly loss amid broad US dollar weakness.
• Hakwish expectations from ECB weigh on greenback despite firmer yields.
• IIF signals Russia’s economic slump to wipe out 15 years of gains.

USD/RUB takes offers to renew a two-week low around 59.10 during the early Thursday morning in Europe.

In doing so, the Russia ruble (RUB) pair cheers the US dollar retreat, as well as the market’s indecision, to keep the bears hopeful.

US Dollar Index (DXY) fades the previous day’s recovery near 102.50, down 0.07% intraday, as hawkish expectations from the European Central Bank (ECB) allow traders to slow down on the USD buying. In doing so, the greenback gauge ignores the firmer US Treasury yields. That said, the US 10-year Treasury yields seesaw around 3.04% after rising over five basis points (bps) the previous day.

Other than the US dollar pullback, Russia’s recent policies supporting the RUB, including payments in local currency and market intervention, are also likely to have drowned USD/RUB prices.

On the contrary, fears of Russia’s economic hardships and downbeat prices of crude oil, Moscow’s key export, challenge the USD/RUB bears. “Russia's economy will shrink 15% this year and 3% in 2023 as the hit from Western sanctions, an exodus of companies, a Russian ‘brain-drain’ and collapse in exports wipe out 15 years of economic gains,” a global banking industry lobby group Institute of International Finance (IIF) said per Reuters.

That said, the market sentiment remains sluggish amid fears of inflation and global economic growth, especially when major central banks are up for scaling down easy money policies. These fears could be linked to comments from the White House, OECD and the World Bank. On Wednesday, White House spokeswoman Karine Jean-Pierre said they expect the inflation numbers to be released at the end of the week to be elevated. Additionally, the Organisation for Economic Co-operation and Development (OECD) cuts the global growth outlook for 2022 while World Bank (WB) President David Malpass warned that faster-than-expected tightening could recall a debt crisis similar to the one seen in the 1980s.

Considering the broad downtrend, despite not so weak US dollar, the USD/RUB prices may rely on the Russia-Ukraine headlines, as well as the US inflation data, for fresh moves.

Technical Analysis

Unless crossing the 64.40 hurdle, USD/RUB is vulnerable to rest the May 2022 swing low, also the lowest level in four years, around 55.90.