- USD/TRY regains upward traction and breaks above 17.00.
- USD’s bullish bias weighs on the lira.
- Inflation fears continue to weigh on the currency.
Further depreciation of the Turkish currency gives additional wings to the USD/TRY and motivates it to break above 17.00 on Tuesday.
USD/TRY is now heading for 2022 highs near 17.40
USD/TRY extends the advance for the fourth consecutive session on Tuesday amid strong USD performance, rebounding risk aversion and recession rumors.
Indeed, the USD saw its bullish momentum gain momentum in response to mounting speculation of a global recession, which has intensified recently after the eurozone final services PMIs fell again in June.
In addition, Monday’s higher-than-expected inflation figures in Turkey also weighed on sentiment around the lira and led the pair to almost fully regain ground lost following the ban on Turkish lira lending to some companies by the banking control body (BDDK) on Friday 24.
What to keep in mind around TRY
USD/TRY looks to consolidate the strong rebound from the 16.00 area as investors continue to digest the latest announcement from the Turkish banking watchdog (BDDK) on June 27.
So far, lira price action is expected to continue to revolve around energy price action, broad trends in risk appetite, the Fed rate path and developments from the war in Ukraine.
In addition, the effects of this new measure aimed at supporting the de-dollarization of the economy will also have their say, at least in the very short term.
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.
Technical levels
So far the pair is gaining 1.40% at 17.0208 and faces the immediate target of 17.3759 (23 Jun 2022 high), seconded by 18.2582 (20 Dec all-time high) and then 19.00 (round level). On the other hand, a break of 16.0365 (monthly low Jun 27) would pave the way for a test of 15.6684 (low May 23) and eventually 15.3361 (100-day SMA).
Source: Fx Street
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