- USD / TRY remains lateralized in the area below 8.70.
- Turkey’s inflation beat consensus in June.
- Investors’ attention is now on next week’s CBRT event.
The Turkish lira keeps range trading unchanged against the dollar and motivates the USD/TRY to stabilize around the 8.70 region so far Tuesday.
USD / TRY remains cautious ahead of CBRT
USD / TRY remains in a consolidation mood around 8.70 following the recent drop from new all-time highs at the 8.80 zone.
Meanwhile, the pair is likely to remain cautious unchanged, as the next meeting of the Turkish central bank (CBRT) approaches (July 14).
Higher-than-anticipated inflation figures in Turkey on Monday caught markets off guard, pouring cold water on any likelihood of an interest rate cut in next week’s CBRT event. Although there is no guarantee of a rate cut later in the year, persistent high inflation is seen as keeping that option out of favor, at least for now.
In fact, Turkey’s CPI rose 1.94% month-on-month in June and 17.53% from a year earlier, beating initial estimates and mitigating speculation that inflation may have peaked earlier in the year. According to additional data, producer prices rose 4.01% month-on-month and 42.89% during the last twelve months.
What to look for around TRY
The outlook for the Turkish lira remains fragile despite the CBRT reiterating its commitment to fighting high inflation at its recent meetings. Meanwhile, the political effervescence within the ruling AK Party, the impact of the pandemic on the economic outlook, high unemployment, and the total absence so far of any intention to implement the much-needed structural reforms, continue to hold on to. the lyre under persistent pressure for the foreseeable future.
Technical levels
So far, the pair has risen 0.05% to 8.6681 and is facing the next bullish barrier at 8.7974 (June 25 all-time high) ahead of 9.0000 (round level). On the downside, a drop below 8.5953 (June 23 weekly low) would point to 8.4971 (50-day SMA) and finally 8.2803 (June 11 monthly low).
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