Are Foreign Exchange Traders Missing Out On These Eastern European Currency Pairs?

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Russia’s invasion of Ukraine triggered a series of economic events leading to a massive collapse in the valuation of the Russian ruble.

In addition to a full-fledged war, the Russian economy suffers from strict economic sanctions imposed by the West. The United States, European Union, United Kingdom, and Canada have expelled some Russian banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT), a global financial messaging system, and frozen the assets of Russia’s central bank. 

The European subsidiary of Russia’s biggest bank was on the brink of collapse as savers rushed to withdraw deposits. In an attempt to mitigate the situation, the Russian central bank has more than doubled interest rates to 20%, but economists warn that the Russian economy could still shrink 5%. 

Traders and investors paying attention to the news would likely have noticed the extreme volatility of the dollar-ruble (USD/RUB) currency pair, which skyrocketed to an all-time high of 122.25 on March 2. The ruble’s direct tie to Russia’s economy has made it the cornerstone asset for proxy bets on the financial implications of the war, but there are reportedly other currencies providing the volatility traders need.

FOREX.com, a broker in the U.S. for foreign exchange (forex) trading, has already conducted an investigation on particularly volatile currency pairs within Europe. Specifically, it notes that traders who look west to the dollar-zloty (USD/PLN), dollar-forint (USD/HUF), and dollar-koruna (USD/CZK) may find the volatility they need to make probabilistic trades. 

Direct access to these currencies is available through FOREX.com here. 

Forex Currency Pairs Affected By Russia’s Invasion Of Ukraine

Delving deep into the technicals, FOREX.com analyst Joe Perry outlines the uncommon movements seen in each of these currency pairs. 

First, he looks at Poland, which shares a border with Ukraine, and investigates the USD/PLN pair: 

“USD/PLN has been moving higher since the beginning of the invasion as well,” Perry said. “Notice the correlation at the bottom of the screen is +0.93. A reading of +1.00 is considered a perfect positive correlation, in which the two assets move in the same direction 100% of the time.  A reading above +0.80 is considered a strong correlation. However, unlike USD/RUB, USD/PLN was held short of making all-time new highs today at 4.3078. The pair hasn’t traded this high since March 2020.”

Perry then examines Hungary – another country that shares a border with Ukraine – and delves deep into the technicals of the USD/HUF chart. 

“USD/HUF looks very similar to the chart of USD/PLN,” he said. “The pair has been moving higher since the invasion began and was halted today at all-time highs near 340.67. The correlation coefficient between USD/HUF and USD/RUB is also +0.93. However, USD/HUF broke through the upward sloping trendline dating back to March 2021. If price breaks into the new all-time high territory, resistance is at the 161.8% Fibonacci extension from the highs of Dec. 15, 2021, to the low of Feb. 7 near 349.84.” 

Finally, Perry looks the furthest west to the Czech Republic and examines the USD/CZK chart.

“The chart of USD/CZK is somewhat like that of USD/PLN and USD/HUF, however, there are many differences,” he said. “The main takeaway is the correlation between USD/CZK and USD/RUB is +0.94. The pair has been moving higher today, however, was halted at the highs of Nov. 26, 2021, near 22.9325.”

Because of the extremely high correlation between these pairs and the USD/RUB, they might be able to be used as proxy bets on the ruble and Russia’s economy. FOREX.com states that it takes care of technical analysis for you, and you have a direct route to the forex market.

Click here for the full technical breakdown and here to get started trading.

Past performance is not indicative of future results. 

FOREX TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IT IS NOT SUITABLE FOR ALL INVESTORS.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.