- Persistently high Turkish inflation is a major limiting factor to the lira's upside
- The Federal Reserve is largely viewed as hawkish in 2026, and will likely not announce any interest rate cut in March
- Despite high nominal interest rates, the lira lacks investor appeal due to negative real returns and growth
The US dollar has maintained its upward path against the Turkish lira in early 2026, registering year-to-date gains of approximately 0.5%, with the USD/TRY pair hovering around 43.14 as of this writing.
Even though half a percent might seem modest in other markets, it’s worth talking about because the lira has been losing value for years. It makes you wonder if the lira could bounce back, if anything unexpected could happen, and what could change things.
Making Sense of the Dollar’s Strength
Turkey’s high inflation, estimated to be around 31% in 2025 before dropping to 16% in 2026 according to the central bank, is still hurting the lira. The Central Bank of Turkey cut its rates, including a 1.5% cut in December 2025. This has created a bigger gap with the US Federal Reserve, causing money to leave Turkey.
MUFG Research’s annual outlook estimates the dollar will reach 45 lira by the end of 2026, because the lira is weak and there are worries about Turkey’s debt. Geopolitical issues and political uncertainty are also scaring away investors, as Bloomberg’s currency converter updates show. Plus, the dollar is attractive because the US economy is doing well and the Fed is being careful.
Can the Lira Pull A Surprise Comeback?
Most analysts don’t think the lira will recover much. For instance, CoinCodex predicts the dollar will go up 1.39% against the lira in the next month, reaching 43.63, which means the lira will keep getting weaker. Goldman Sachs expects the dollar to reach 44 lira by late January 2026 and 48 by July, because Turkey will probably cut rates again.
If the lira were to get a boost, it would probably come from a huge, surprise investment from another country. If Turkey were to complete big energy deals or get major investment agreements from Gulf countries, the dollar could drop suddenly for a short time.
USD/TRY Prediction
The bullish momentum on the USD/TRY pair is strong and points to continued upward trend on the daily charts. The Average Directional Index (ADX) is around 44, which affirms the strong upward push. The pivot is at the 43.00, which also offers psychological support. The key resistance level is at 43.16, just above the latest intraday high. If it goes above this, it might head toward 43.20. If it drops deeper below the pivot, the next support level is at the 42.94 mark, beyond which the upside narrative will be invalid and the next support likely to be around 42.85.
USD/TRY daily chart on January 9, 2026 with support and resistance levels. Created on TradingView
The gain is driven by persistent inflation in Turkey and a resilient US Dollar. Global investors favor the Dollar’s stability, especially as the Fed signals it may not cut interest rates as quickly as previously hoped.
Yes, it is. If US rates drop a lot or Turkey’s reforms work out, things could change.
If the US Fed is too aggressive, Turkey isn’t stable, or war gets worse, the Lira could lose even more. On the flip side, substantial Foreign Direct Investment like inflows from the EU could help it recover.