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USD/TRY remains limited in a range just below 18.00

  • USD/TRY remains sideways trading below 18.00.
  • Turkey’s current account deficit stood at $3.46 billion in June.
  • US producer prices contracted 0.5% mom in July.

The USD/TRY reverses two consecutive daily pullbacks and retakes gains near 17.96 on Thursday.

USD/TRY remains just below 18.00

The bulls continue to push but so far there seems to be some major resistance around the 18.00 area.

In fact, although the selling bias around the Turkish lira has held up well over the last couple of weeks, the containment zone around 18.00 has held up quite well so far.

On the national calendar, the current account deficit narrowed to $3.46 billion in June (from $6.47 billion).

Meanwhile, investors have started to pay attention to the next monetary policy meeting of the Central Bank of Turkey (CBRT), which will be held on August 18, and in which the consensus is inclined to maintain the position, despite that inflation shot up at the fastest pace since 1998, with almost 80% year-on-year in July.

What to keep in mind around TRY

USD/TRY’s bullish bias remains unchanged and remains on track to revisit the key 18.00 area.

Meanwhile, the lira is expected to continue oscillating around developments in energy and commodity prices – which are directly correlated to developments in the war in Ukraine – general trends in appetite for risk and the path of the Fed rates in the coming months.

Additional risks facing the Turkish currency also come from within, as inflation shows no signs of abating (despite rising less than expected in July), real interest rates remain entrenched in negatives and political pressure for the CBRT to move towards low interest rates remains pervasive. 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.

key levels

So far the pair is gaining 0.92% at 17.9524 and faces the immediate target of 17.9874 (3rd Aug high) seconded by 18.2582 (20th Dec all-time high) and then 19.00 (round level). On the other hand, the break of 17.1903 (weekly low Jul 15) would pave the way towards 16.2471 (100-day SMA) and eventually 16.0365 (monthly low Jun 27).

Source: Fx Street

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