USD/TRY Approaching Record Highs As CBRT Rate Decision Nears

The USD/TRY is presently trading with muted volumes, and rightly so. Thursday brings the latest consignment of the interest rate decision of the Central Bank of the Republic of Turkey (CBRT). The notoriously dovish CBRT kept interest rates at 14.00% in its June meeting, even when the consumer price index in Turkey rose above 73%. 

The markets do not expect the CBRT to make any changes to the interest rate. At the same time, the Lira would have to face off against a greenback strongly buoyed by US interest rate hike expectations. Some analysts even feel the Fed may tighten by as much as 100 basis points. 

Expect a choppy day of price action on the USD/TRY. If the CBRT holds rates, this would be a catalyst for a further weakening of the Lira, allowing the USD/TRY to retest previous all-time highs. Whatever the case, the price action should settle by Friday, allowing for more flows that the Fed’s interest rate expectations would primarily direct.

This week features a scanty calendar on the US front. The price action on the USD/TRY could remain tight until Thursday. However, as long as the price action stays above the 17.194936 support, the bias remains bullish. 

USD/TRY Forecast

The bounce off the 17.194936 support paves the way for the bulls to attack the 27% Fibonacci extension level close to the 20 December 2021 all-time high at 18.362400. If the price breaks this level, it targets the 19.247241 resistance mark at the 61.8% Fibonacci extension level. This would be a new record high for the USD/TRY.

On the other hand, a breakdown of the 17.194936 support allows the bears to gain access to the 16.336290 support level, where the 3 June 2022 low is located. Immediately below this area, the 50% Fibo retracement at 16.105135 comes into the picture. This is where you will find previous lows of 27 May/27 June 2022.

Additional downside targets are found at the 15.734358 support level (23 May 2022 low), which is just below the 61.8% Fibonacci retracement level. Finally, 15.301341 is the 78.6% Fibonacci retracement mark, which forms the only barrier to the south that prevents the bears from accessing the ceiling of the rectangle pattern at 14.923003. 

USD/TRY: Daily Chart