The US GDP data reported last week and the Fed meeting, which started Tuesday, has given a chance to look for a trading opportunity in the US dollar-based currency pairs. Before going through the charts, we flipped through the recommendations given as early as a month before. On September 19, we had suggested going short in the USDRUB pair near 65.25 levels, with a target of 63.80. A one-touch put option had been recommended for binary traders. All the targets were met in the final days of September. By the second week of October, the currency pair had fallen to a low of 61.80. A series of positive economic data enabled the Greenback to bounce back to a level of 63 last week. We believe that the Greenback is now on a firm uptrend against the Ruble due to the reasons provided below.
Last Friday, the US Bureau of Economic Analysis reported that the US economy grew 2.9% y-o-y in the third quarter, against the analysts’ expectations of 2.5% growth. The US GDP grew at an upwardly revised 1.4% in the second quarter. The export of Soybeans contributed to nearly 0.9% of the GDP growth. It was the best-reported growth in the past two years. The reported GDP growth rate has further increased the probability of monetary policy tightening by the Fed.
In the case of Russia, the trade surplus declined by almost half to $4.9 billion in August 2016, from $8.8 billion in the similar period last year. The analysts were expecting a trade surplus of $7.2 billion. The recorded surplus is the lowest since 2009. The trade surplus narrowed due to a decline in the exports, which was hit hard due to prevailing sanctions. On September 16, the Central bank of Russia slashed its short-term repo rate by 50 basis points to 10%. The Central bank also announced that it would consider further cuts in 2017. It can be noted that in the quarter ended June, the economy contracted by 0.6%. The rate cut was made in an effort to lead the economy to a growth path. Thus, considering the details, we believe that the USDRUB will remain bullish in the short-term.
Technically, the RSI oscillator has crossed into the bullish region. The rising Accumulation/Distribution indicator shows that traders are increasing their long positions in the USDRUB pair. So, we can anticipate the currency pair to move up further to its next technical resistance at 64.10.
A Forex trader can benefit from the prediction by taking a long position near 63 levels in the USDRUB pair. To safeguard the account from huge losses, a stop-loss order can be placed below 62.40. The profit can be booked when the exchange rate reaches a high of 64.
Through the purchase of a one-touch call option, a trader can capitalize on the imminent uptrend of the USDRUB pair. The strike level can be as high as 64 for the call option. Finally, the binary trader should opt for an expiry date in the last week of November.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
