USD/TRY at all-time highs, above 18.30

• USD/TRY is trading at fresh highs around the 18.30 area.
• The lira depreciates further and flirts with the 18.30 level against the dollar.
• The CBRT’s decision will be very close throughout the week.

Further weakness of the Turkish currency motivates the USD/TRY to mark new all-time highs around the 18.30 level earlier in the week.

USD/TRY attentive to the Fed and the CBRT

USD/TRY continues its upward march, albeit at a snail’s pace, on Monday, this time reaching the 18.30 zone, ie, new all-time highs, thanks to the strength of the dollar and the ever-present depreciation of the lira.

At the end of the week, the Turkish central bank (CBRT) will hold its monthly monetary policy meeting. Consensus around the event seems split between those expecting further rate cuts and many others leaning towards a wait-and-see stance to assess the effects on the economy (if any) of August’s surprise rate cut. .

Furthermore, the lira has already lost more than 38% in 2022 and has closed with losses in every month of the year so far.

Additional upward pressure for the pair would likely come from Wednesday’s FOMC meeting, where a 75 basis point rate hike by the Fed is largely anticipated, which should keep sentiment in the complex depressed. risk and the currency space of emerging markets.

What to keep in mind around TRY

USD/TRY maintains the underlying gradual uptrend and is already flirting with the 18.30 level.

So far, price action around the Turkish lira is expected to continue to revolve around developments in energy and commodity prices – which are directly correlated to developments in the war in Ukraine – general trends in risk appetite and the trajectory of Fed rates in the coming months.

Additional risks facing the Turkish currency also come from within, as inflation shows no signs of abating (despite rising less than expected in July and August), real interest rates remain well entrenched in negative territory and political pressure for the CBRT to go for low interest rates remains pervasive.

Furthermore, the lira will continue to suffer in the context of Ankara’s plans to prioritize growth (through higher exports and tourism revenues) and improving the current account.

Technical levels

So far the pair is gaining 0.55% at 18.2944 and faces the next hurdle at 18.3033 (Sep 19 all-time high) seconded by 19.00 (round level). To the downside, a break below 17.8743 (55-day SMA) would expose 17.8590 (weekly low Aug 17) and finally 17.7586 (monthly low Aug 9).