USDTRY consolidates at eight-month highs as the pressure on Turkish lira persists after the consecutive interest rates cuts by the central bank of Turkey. Last Friday stronger NFP data out of the USA boosted US dollar above the 6 mark for the first time since May 2019. Banks in Turkey sold over 4 billion USD in an effort to stop the Turkish lira depreciation. Last week the S&P Global Ratings classified Turkey’s foreign-currency regime as a “managed float,” amid the interventions by state-controlled banks and limits introduced by the regualtor on Turkish banks’ derivative positions with non-residents, designed to stop the Turkish lira sellers.
USD rally against the Turkish lira started in late November as the CBRT cut interest rates while the selling pressure accelerated after the CBRT cut interest rates down to 11.25% on January 16th. The Turkish government and President Erdogan said that they want interest rates to go below the 10% mark in an attempt to revive the Turkish economy. The unemployment rate declined to 13.3% in November from the previous off 13.4%. War operations in Idlib Syria and an escalation in confrontation with the Syrian army will also weighs on Turkish lira.
USDTRY is 0.05% lower at 6.0167 retreating today from eight-month highs made on Friday. hitting fresh eight-month highs. The momentum is clearly bullish for the pair and as long as the pair is trading above the 6 mark a breakout up 6.50 looks possible.
On the downside, first support for the USDTRY stands at 5.9835 the daily low. If the USDTRY breaks below that level the next critical support stands at 5.9325 the low from January 28. A break below the 50-day moving average at 5.8934 might cancel the bullish bias.
On the flip side, the initial resistance for USDTRY stands at 6.0192 the daily top. Next hurdle on the upside for the bulls is at 6.0407 the high from February 7th. The next supply zone awaits at 6.0760 the high from May 28th.