USD / TRY remains offered, finds support around 8.6000

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  • USD / TRY extends the decline to the 8.6000 zone.
  • The softer tone of the dollar favors currency flows from emerging markets.
  • A rate cut this month looks increasingly unlikely.

The Turkish lira appreciates even more against the dollar and drags the USD/TRY to the 8.6000 region, where decent support emerged.

USD / TRY remains under pressure

Despite posting gains for the second session in a row, the lira remains under pressure and the bets for USD / TRY to rise further to the 9.00 level continue to rise.

The softer tone of the dollar helps the emerging market currency space to take a firmer position, which at the same time favors the Turkish lira.

Recent lower-than-expected inflation figures in Turkey add to the view that inflation may have peaked in April and also appears to have opened the door for an imminent interest rate cut by the Turkish central bank. (CBRT).

Although this scenario is preferred by President Erdogan, it is not favored for the moment, as it could trigger another currency crisis (among other catastrophes) at a time when the country is struggling to leave the pandemic behind and return. to the path of growth.

What to look for around TRY

The outlook for the Turkish lira continues to deteriorate almost daily, as rumors of interest rate cuts continue to run in the background and continue to be supported by the Erdogan administration. Although inflation appears to have peaked in April, it is still very high and a move in rates at the June meeting appears to have lost some motivation for the time being. Meanwhile, the political effervescence within the ruling AK Party, the impact of the pandemic on the economic outlook, high unemployment, and the total absence so far of any intention to implement the much-needed structural reforms, remain to the point of keeping the the lyre under persistent pressure.

Technical levels

So far, the pair is retreating 0.16% to 8.6309 and a drop below 8.2982 (May 17 weekly low) would point to 8.1316 (April 29 weekly low) and finally 7.9937 (April 17 monthly low). ). On the upside, the next upward barrier is located at 8.7401 (June 2 all-time high) before 9.0000 (round level).

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