- The USD/TRY pair continues to gain ground on the upside and is approaching 18.00.
- The pair is trading at levels last seen in December 2021.
- The FOMC is expected to raise rates by 75 basis points later on Wednesday.
the turkish lira stays defensive and makes the USD/TRY hit new all-time highs around 18.00 on Wednesday.
USD/TRY focuses on the Fed and the IPC
The bullish bias in USD/TRY remains anything but narrow on Wednesday and is already trading a considerable distance from the 18.00 mark, an area last visited in late December 2021.
In fact, the pair has closed higher uninterruptedly since July 18 and in every month so far this year. In addition, the lira has already lost more than 35% against the greenback since the beginning of the year compared to 44% in all of 2021.
The lira remains under almost permanent pressure following the Ukraine war-related energy crisis, while high inflation keeps household sentiment depressed amid pervasive inaction from the Turkish central bank (CBRT).
The Economic Sentiment Index will be published on Thursday. Later on Wednesday, the FOMC event will be in the spotlight as the Fed is expected to hike rates by 75 basis points to 2.25%-2.50%, which should be another factor to subdue currencies. of emerging markets to additional pressure on the short-term horizon.
What to keep in mind around TRY
USD/TRY bullish bias remains unchanged and remains on course to revisit the key 18.00 zone.
Meanwhile, the lira is expected to continue to oscillate around energy price developments, which appear to be directly correlated with 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, real interest rates remain entrenched in negative, and political pressure for the CBRT to go rate Low interest rates remain ubiquitous. In addition, there does not seem to be a plan B to attract foreign exchange in a context in which the country’s foreign exchange reserves are decreasing day by day.
Technical levels
So far the pair is gaining 0.37% at 17.9097 and faces the immediate target of 17.9266 (27 Jul high) seconded by 18.2582 (20 Dec all-time high) and then 19.00 (round level). On the other hand, a break of 17.1903 (weekly low Jul 15) would pave the way to 16.8419 (55-day SMA) and eventually 16.0365 (monthly low Jun 27).
Source: Fx Street
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