- USD / TRY leaves behind four consecutive days with losses.
- Decent support emerges around 8.4000
The Turkish lira cuts some of its recent gains and motivates the USD/TRY to gain some traction to the upside and retest the 8.5000 area on Wednesday.
USD / TRY bounces from 2-week lows
USD / TRY reverses four daily pullbacks in a row and bounces off Tuesday’s fresh 2-week lows at levels below 8.4000, as market participants continued to weigh in on last week’s decision by the Turkish central bank (CBRT) to drop rates unchanged once again.
It is worth remembering that the CBRT decided to leave the one-week repurchase rate intact at 19.00% due to constant concerns about high inflation, both in Turkey and abroad. However, the central bank gave an optimistic assessment of the economic recovery in the country, supported mainly by the vaccination campaign and the strong rebound in the tourism industry.
In addition, the CBRT reiterated its commitment to maintain the restrictive monetary stance, with a policy rate that will be set above the inflation rate.
Additional selling pressure on the lira on Wednesday comes from the recovery in crude oil prices, regarding Turkey as an importer of crude. In fact, European benchmark Brent crude is trading with decent gains and is approaching the key mark of $ 70.00 per barrel so far.
There is no data scheduled on the Turkish economic docket, although investors are expected to closely follow the FOMC Minutes to be released later on Wednesday.
Technical levels
So far, the pair is gaining 0.60% at 8.4818 and faces the next hurdle at 8.5805 (50-day SMA) followed by 8.6806 (August 11 monthly high) and then 8.7974 (June 25 all-time high). On the other hand, a drop below 8.3863 (weekly low on August 17) would point to 8.2921 (monthly low on August 3) and finally 8.2803 (monthly low on June 11).
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