USD / TRY rises to 5-week highs above 8.6000

• USD / TRY extends higher and breaks above 8.6000.
• Turkey’s year-end CPI forecast was 16.74%.
• Lire losses continue to advance ahead of the CBRT event.

The Turkish lira depreciates further and pushes the USD/TRY to new 5-week highs past the 8.6000 level on Friday.

USD / TRY targets yearly highs around 8.8000

TRY is rapidly losing ground and motivates USD / TRY to advance for the second session in a row and break above the consolidation range that prevailed earlier in the week. The pair’s rally took an additional pace after the pair broke above the 55 and 100-day SMAs around 8.5000.

The lira has been accelerating its losses against the dollar with increasing investor caution ahead of the Turkish central bank’s next monetary policy meeting (CBRT) to be held next week. In fact, fears about the start of the easing cycle much earlier than expected (and necessary) by the CBRT have been exacerbated after the central bank announced last week that core inflation will now be the anchor for setting the rate of policy (instead of the IPC holder).

It is worth remembering that the headline CPI rose above the 19.0% level in August, and above the bank’s one-week buyback rate, and that the government now sees inflation heading to 16.2% by the end. of the year and 9.8% by the end of 2022.

Key levels

So far, the pair is gaining 0.76% at 8.5919 and a drop below 8.4013 (September 10 low) would target 8.3905 (20-day SMA) and finally 8.2590 (September 6 monthly low). On the other hand, the next rising barrier lines up at 8.6806 (August 11 monthly high), followed by 8.7303 (July 8 high) and then 8.7974 (June 25, 2021 high).