USDTRY Bears Return Below the 50-Day Moving Average
USDTRY continues the correction from two-year highs as the Turkish economy gradually reopens and major Turkish banks managed to roll over their debts in May. Optimism that Turkey will manage to get through the coronavirus crisis alone, without a loan from the IMF also boosts sentiment. Restrictions measure earlier on May on some foreign institution (Citibank, BNP Paribas, and UBS) banned from trading the Turkish lira also helped the local currency.
The Turkish economy is struggling amid the coronavirus crisis as the country faces 169 billion in foreign debt in the next year while the fx reserves are only 84 billion.
Last week, the central bank of Turkey (CBRT) cut the interest rates for the ninth time in a row by 50 basis points (bps) to 8.25% in an attempt to boost the coronavirus battered economy. Markets expected the interest rate cut and the USDTRY didn’t react on the news. Turkey’s interest rate is now negative as it stands at 8.25% while the annual inflation runs at 10.9%.
USDTRY is 0.61% higher at 6.7717, as the pair correction from the recent highs stalled yesterday at 6.6958. The technical outlook has improved in the short term as the pair yesterday breached below the 50-day SMA. The long term picture remains bullish despite the recent correction.
On the downside, the first support for USDTRY stands at 6.7421 the daily low. The next support area stands at 6.6958 the low from yesterday trading session. More bids might emerge at 6.6304 the low from April 9.
On the other side, immediate resistance for USDTRY stands at 6.7763 the daily top. If the USDTRY pair breaks higher, then the next resistance will be met at 6.7994 the 50-day moving average. If buyers persist, the next target will be met at 6.8756 the high from May 19.