The USDTRY is trading higher on the day as the Central Bank of the Republic of Turkey (CBRT) cut the one-week repo auction rate by 50bps as expected, from 11.25% to 10.75%. The USDTRY spiked 340 pips in reaction to this move but has now pulled back slightly to 6.0745 as at the time of writing.
This is the 6th successive cut delivered by the CBRT under the leadership of Murat Uysal, who took over from Murat Cetinkaya in 2019. Here are takeaways from the accompanying rate statement from the CBRT:
“Monetary stance will be determined by considering the indicators of the underlying inflation trend to ensure the continuation of the disinflation process.”
“Despite signs of recovery, investment and employment remain weak.”
“Keeping the disinflation process in track with the targeted path requires the continuation of a cautious monetary stance.”
The USDTRY is now trading at nearly 9-month highs.
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Technical Outlook for USDTRY
The bias for this pair remains bullish as the CBRT continues to pursue a relentless easing cycle. The USDTRY continues to maintain the bullish breakout of the symmetrical triangle on the monthly chart, per technical expectations. The nearest medium-term resistance lies at 6.28714, the 24 September 2018 highs. Further resistance lies at the 6.65044 price level, where the 6 August 2018 highs pitched tent.
On the flip side, a profit-taking selloff may trigger a pullback towards the 5.98304 price level, which corresponds to the 23.6% Fibonacci retracement level. This area is also where the upper boundary of the triangle resides.
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