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USD/TRY: Breaking above the 18.00 level remains a distinct possibility

  • USD/TRY makes new 2022 highs just below 18.00.
  • Türkiye inflation extended the rise in July to 79.60% annual.
  • Producer prices were also on the strong side in July.

the turkish lira extends the weekly depreciation against the USD and raises the USD/TRY to new all-time highs around 17.97 on Wednesday.

USD/TRY rises on July’s high CPI

USD/TRY adds to Tuesday’s gains and trades within striking distance of the key mid-week 18.00 mark hurdle.

The selling bias in the lira intensified after CPI inflation numbers rose 79.60% in the year to July, the fastest pace in 24 years. However, the CPI figure was lower than consensus expected and remained supported by high energy and commodity prices.

Furthermore, the core CPI rose 61.69% year-on-year and producer prices increased 144.61% in the last twelve months.

What to keep in mind around TRY

USD/TRY bullish bias remains unchanged and remains on course to revisit the key 18.00 zone.

Meanwhile, the lira is expected to continue to oscillate around energy price developments, which seem to be directly correlated with 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, real interest rates remain entrenched in negative, and political pressure for the CBRT to go rate Low interest rates remain ubiquitous. In addition, there does not seem to be a plan B to attract foreign exchange in a context in which the country’s foreign exchange reserves are decreasing day by day.

Technical levels

So far the pair is gaining 0.08% at 17.9425 and faces the immediate target of 17.9658 (3rd Aug high) seconded by 18.2582 (20th Dec all-time high) and then 19.00 (round level). On the other hand, a break of 17.1903 (weekly low Jul 15) would pave the way towards 17.0474 (55-day SMA) and eventually 16.0365 (monthly low Jun 27).

Source: Fx Street

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