USDTRY trades higher for the second day as the consolidation phase at two-year highs continues just shy of the 7.00 mark.
Turkey is preparing plans to re-open some businesses starting next week as the new cases and deaths from the coronavirus outbreak have begun to decline. The Turkish government is planning to restart domestic flights and rail travel, while some retailers and small shops will also re-open.
The Turkish government has not imposed a strict lockdown, therefore the impact on the economy is less severe than for other European countries. A relief package has provided around 107.4 billion Turkish liras in financial support to 120,000 companies, while there is an additional package of up to 200 billion Turkish liras for consumers and businesses.
IMF predicts a contraction of 5% in 2020 as the central bank of Turkey cut the interest rates by another 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.
USDTRY is 0.17% higher at 6.9983, as the rally that started in January drives the pair to two-year highs. The technical picture for the pair is clearly bullish and an overshoot above the 7.00 mark looks possible. USDTRY trades in the overbought zone since April 14 so a quick correction can’t be ruled out.
On the upside, the initial hurdle for the pair stands at 6.9992 the daily top. The next resistance awaits at the 7.00 psychological mark. Above 7.00 we might see an overshoot up to 7.2000 mark.
On the flip side, first support for the pair stands at 6.9849 the daily low. If the USDTRY pair breaks below, the next support level stands at 6.8773 the low from April 20 trading session. A move below might test 6.8311 the low from April 17.