EUR/RUB Outlook: Bearish, as the rate is below its recent average and nearing recent lows, with pressure from ongoing geopolitical risks.
Key drivers:
• Rate gap: The European Central Bank is maintaining a neutral monetary policy, while the Bank of Russia holds a high interest rate to combat inflation, creating a disparity that supports the euro.
• Risk/commodities: Oil prices are trending above average, which normally strengthens the ruble due to Russia’s dependence on energy exports.
• One macro factor: Sanctions from the European Union limiting gas contracts could lead to further ruble weakness, affecting its value against the euro.
Range: EUR/RUB is likely to drift sideways within its recent low range but could test lower levels as economic pressures continue.
What could change it:
• Upside risk: A resolution to geopolitical tensions could boost investor confidence in the euro.
• Downside risk: Continued economic sanctions on Russia could further weaken demand for the ruble.
