The Central Bank of the Republic of Turkey (CBRT) has elected to keep the interest rate in Turkey unchanged at 19.00%, matching market expectations.
The bank’s rate statement reiterated that the current tight monetary stance would stay until it achieved a significant drop in the inflation rate trajectory that was forecast in the April report.
It is unclear how the bank’s decision to keep interest rates at current levels to produce a disinflationary effect would rub off on the country’s President, who has a history of sacking CBRT chiefs that failed to tow the line of monetary policy easing.
With the greenback gaining broadly on the back of the FOMC’s hawkish projections, the USD/TRY is trading higher on the day, inching higher by 1.07%.
Technical Outlook: USD/TRY
The expectation for the USD/TRY following the decisions of the two opposing central banks is for the pair to continue its bullish approach towards the current all-time high at 8.74726. Above this level, the price could continue on its march towards the 78.6% Fibonacci extension at 8.95736. This price mark coincides with the extension of the channel’s upper edge, reinforcing this resistance.
On the flip side, rejection at the current ATH and subsequent pullback provide for a corrective retracement towards 8.57488, with 8.36986 coming into the picture on a break of the channel’s lower edge. Additional downside targets lie at 8.19744 and 8.04069.