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USD/TRY rises and approaches 18.20

  • USD/TRY extends gradual march north to 18.20 area.
  • The better tone of the dollar lifts the pair to new all-time highs.
  • Turkey’s GDP grew by 7.6% year-on-year during the second quarter.

The improvement of the US dollar keeps the USD/TRY near 2022 highs at levels near 18.20 on Wednesday.

USD/TRY continues to target the all-time high around 18.25

Meanwhile, the bullish bias is unlikely to leave USD/TRY for now, with the immediate target at the all-time high around 18.25 (20 Dec 2021).

Furthermore, the pair has posted gains in every month since the beginning of the year and the lira has only advanced in one of the last nine weeks against the dollar.

The positive news on the national agenda also did not give the Turkish currency wings after GDP figures showed that the economy expanded at an annualized rate of 7.6% during the April-June period, while exceeding expectations.

What to keep in mind around TRY

USD/TRY’s bullish bias remains unchanged and is trading near the all-time high around 18.25. The bullish trend in spot has been reinforced after the unexpected cut in interest rates by the CBRT 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.

Technical levels

So far the pair is gaining 0.07% at 18.1741 and faces the immediate target of 18.1973 (2022 high Aug 29) seconded by 18.2582 (all-time high Dec 20) then 19.00 (round level). On the other hand, a break of 17.7586 (Monthly Low Aug 9) would pave the way towards 17.5781 (55-day SMA) and eventually 17.1903 (Weekly Low Jul 15).

Source: Fx Street

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