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USD/TRY: Test of 18.00 remains elusive so far

  • USD/TRY adds to Monday’s gains near the 18.00 mark.
  • The current consolidation is still capped at 18.00.
  • The CBRT is expected to maintain the current status quo.

The lira depreciates even more and motivates the USD/TRY to once again challenge the upper end of the current range just below the 18.00 stick on Tuesday.

USD/TRY now looks towards the CBRT

USDS/TRY posts second straight session of gains on continued USD buying bias, still amid a persistent risk-off tone and further helped by rising US yields.

Meanwhile, the lira is expected to continue to draw attention ahead of the Central Bank of Turkey’s (CBRT) interest rate decision later in the week. However, the consensus among investors is that the central bank will stand by and leave the 1-week repo rate unchanged at 14.00%.

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 oscillating around developments in energy and commodity prices – which are directly correlated to the events of the war in Ukraine – general trends in appetite for risk and the path of the 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 entrenched in negatives and political pressure for the CBRT to go for low interest rates remains pervasive. 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 0.13% at 17.9604 and faces the immediate target of 17.9874 (3rd Aug 2022 high) seconded by 18.2582 (all-time high Dec 20th) and then 19.00 (round level). On the other hand, a break of 17.1903 (weekly low Jul 15) would pave the way towards 16.3438 (100-day SMA) and eventually 16.0365 (monthly low Jun 27).

Source: Fx Street

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