USDTRY consolidates at two-year highs after the central bank of Turkey cut the interest rates by 100 basis points to 8.75% for the eighth time in less than a year, in an attempt to combat the coronavirus impact on the economy. The central bank said that the rate cut is in line with the efforts to maintain a disinflation process and create a more robust economic recovery. Now the interest rates are below the inflation rates and that increase the demand of USD in the local economy. CBRT also raised the ceiling on the size of Turkish lira swap transactions to 30% of banks’ total foreign exchange and derivatives transactions from 20%.
Turkish Lira is Vulnerable
Turkey’s economy is vulnerable, and the Turkish lira is depreciating fast against the USD as the fast-rising coronavirus cases threaten to plunge the already fragile Turkish economy into much more danger. There are now over 1000,000 confirmed coronavirus cases while the deaths have surpassed 2,400. The Turkish lira has lost almost 18% of it’s value against the greenback and hovers just below the 7.00 mark.
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USDTRY Price Support and Resistance
USDTRY is 0.38% higher at 6.9737, as the healthy rally that started in January 2020 drives the pair to 7.00.
USDTRY pair makes consecutive higher highs and higher lows, and a break above 7.00 looks inevitable. USDTRY trades in the overbought zone the last week so a fast pullback can’t be ruled, but probably that would be a buying opportunity.
On the upside, the first hurdle for USDTRY stands at 6.9824 the daily high. The next resistance awaits at 6.9996 the recent high which guards the 7.00 psychological mark.
On the other side, first support for the pair stands at 6.9538 the daily low. If the USDTRY pair breaks below, the next support level stands at 6.8713 the low from April 20 trading session. A credible break below might test 6.7430 the low from April 13.
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