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USD/TRY resumes rally near 13.60 amid cautious trading

  • USD/TRY fades recent weakness and advances to 13.60.
  • The pair maintains the consolidation so far.
  • All attention is now on Thursday’s CBRT event.

The Turkish lira resumed its depreciation on Thursday and is seen pushing the USD/TRY to the area of ​​13.60 on Tuesday.

USD/TRY remains capped at 14.00

USD/TRY is regaining some bullish traction in line with the bullish sentiment surrounding the dollar and managing to reverse two consecutive daily pullbacks on Tuesday.

The US dollar extended the rally after hitting new lows last week against its major peers, supported by firm expectations of a Fed rate move as early as March and persistent upward movement in US markets. US yields

Caution among investors has increased in recent weeks as Turkey’s central bank is set to meet on Thursday, with consensus among market participants fairly divided on what the central bank’s next move might be.

What to look for around TRY

The pair seems to have entered a consolidation phase within a range of 13.00-14.00 since the beginning of the new year. Higher-than-expected inflation figures released earlier in the year put the lira under additional pressure combined with some cracks in confidence among Turks regarding the government’s recently announced plan to promote the de-dollarization of the economy. Meanwhile, the CBRT’s reluctance to change course (collision?) and pervasive political pressure to favor lower interest rates in the current context of runaway inflation and (very) negative real interest rates are forecast to keep the currency country under intense pressure at the moment.

Technical levels

So far the pair is gaining 1.33% at 13.6001 and a drop below 12.7523 (3 Jan 2022 low) would pave the way for a test of 12.4787 (55-day SMA) and finally 10.2027 (23rd monthly low). from December). On the other hand, the next upside barrier lines up at 13.9319 (Jan 10, 2022 high), followed by 18.2582 (Jan 20 all-time high) and then 19.0000 (round level).

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