USD/TRY is at its highest level this month. The market is reacting to President Biden’s announcement and comments by central bank’s governor Sahap Kavcioglu. On Friday, the US president stated that his government recognizes the 1915 mass murders of Armenians in the Ottoman Empire as a genocide.
Subsequently, investors are concerned on whether the currently strained relations between Turkey and the US will trigger a repeat of the 2018 currency crisis. Turkey’s estranged relations with Donald Trump’s administration were one of the key factors that led to the Turkish lira nosediving.
Furthermore, Turkey’s central bank governor has held on to his view that rate hikes would hurt the economy. In today’s session, USD/TRY will further react to the capacity utilization data by the Turkish Statistical Institute. Besides, the central bank is scheduled to release April’s manufacturing confidence numbers.
USDTRY Technical Outlook
USD/TRY is trading at its highest level since 30th March. At the time of writing, it was up by 0.33% at 8.4247. This is close to the over four-month high it reached when President Tayyip Erdogan fired Naci Agbal as the central bank’s governor. After sacking the policy hawk, who was largely respected by investors and analysts, the pair rose by about 15% to 8.4895.
On a 4-hour chart, USD/TRY is in the overbought territory with an RSI of 87. Besides, it is trading above the 14 and 28-day exponential moving averages. While the outlook remains bullish, it is likely to pull back before moving higher to 8.5000.
At its current resistance level of 8.4577, it may pull back to 8.3428. Below that point, the levels to watch out for will be 8.1966 and the psychological 8.0000. On the other hand, a move past the current resistance level will push it to 8.5000, where it will find some resistance. Beyond that, the next target will be 9.0000.