- USD/TRY is under pressure after flirting with 18.25.
- The downward trend of the Turkish currency continues.
- Monday’s CPI will be published below.
The Turkish lira has hit record lows against the dollar after the USD/TRY briefly exceed 18.25 in Friday’s session.
USD/TRY could continue to rise and retest 20.00…soon
USD/TRY maintains buying interest for the third session in a row, despite teetering below the all-time high above 18.25 at the end of the week.
In fact, the selling trend of the Turkish lira is expected to continue in the immediate future and could even gain strength in the coming periods considering the growing divergence between the Federal Reserve and the Turkish central bank (CBRT).
In fact, the dollar looks firmer against the risk complex and the emerging market currency universe in the current context of rising expectations of further tightening by the Federal Reserve, as inflation in the US economy appears to be on the rise. far from diminishing.
Nothing is scheduled on the Turkish docket on Friday, while US non-farm payrolls came in slightly above estimates at 315,000 for the month of August. The US unemployment rate, meanwhile, rose to 3.7%.
What to keep in mind around TRY
USD/TRY’s bullish bias remains unchanged and is approaching the all-time high around 18.25. Spot’s bullish trend has intensified following the unexpected CBRT rate cut on August 18.
Meanwhile, price action around the Turkish lira is expected to continue to oscillate around developments in energy and commodity prices – which are directly correlated to developments in the war in Ukraine -, general trends in risk appetite and the trajectory of 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 well entrenched in negative and political pressure for the CBRT to go for low interest rates remains pervasive.
In addition, there seems to be no other immediate alternative to attract foreign exchange other than through tourism income, in a context in which the official figures of the country’s foreign exchange reserves continue to be surrounded by growing skepticism among investors.
key levels
So far the pair is gaining 0.14% at 18.2187 and faces the immediate target of 18.2574 (2nd Sep high) seconded by 18.2582 (20th Dec all-time high) and then 19.00 (round level). On the other hand, a break of 17.7586 (monthly low Aug 9) would pave the way to 17.6120 (55-day SMA) and eventually 17.1903 (weekly low Jul 15).
Source: Fx Street
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