- USD/TRY remains cautious mid-13.00 so far.
- Investors and the lira continue to watch the CBRT event.
The Turkish lira widens the range and motivates the USD/TRY to hold around the 13.50/60 zone so far on Wednesday.
USD/TRY focused on the CBRT
Price action around USD/TRY remains muted for another mid-week session, still at 13.50 and against the backdrop of growing caution ahead of the Turkish central bank’s (CBRT) monetary policy meeting on Thursday.
Consensus ahead of the key CBRT event remains well divided, although the call for a “pending” decision seems to prevail, albeit by a slim margin. In such a scenario, it will be the first meeting where the CBRT will refrain from acting on rates following 500bp rate cuts since the September meeting.
Still talking about the CBRT, the central bank announced that it closed a 3-year swap deal with the central bank of the United Arab Emirates (CBUAE) worth TL64B and AED18B.
What to look for around the TRY
The pair holds the multi-session consolidation in place, always within the 13:00-14:00 range at least until the CBRT meeting on Thursday. Higher-than-expected inflation figures released earlier in the year put the lira under additional pressure combined with some cracks in confidence among Turks regarding the government’s recently announced plan to promote the de-dollarization of the economy. Meanwhile, the CBRT’s reluctance to change course (collision?) and pervasive political pressure to favor lower interest rates in the current context of runaway inflation and (very) negative real interest rates are forecast to keep the currency country under intense pressure at the moment.
Technical levels
So far the pair is gaining 0.11% at 13.5397 and a drop below 12.7523 (3 Jan 2022 low) would pave the way for a test of 12.5482 (55-day SMA) and finally 10.2027 (low). monthly of December 23). On the other hand, the next upside barrier lines up at 13.9319 (Jan 10, 2022 high), followed by 18.2582 (Jan 20 all-time high) and then 19.0000 (round level).
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