USDTRY Gains As CBRT Eases Repo Rate by 100 basis points to 9.75%

USDTRY Turkish lira
USDTRY Turkish lira

The USDTRY is up this Tuesday after the Central Bank of the Republic of Turkey (CBRT) lowered the one-week repo auction rate by 100 bps from 10.75% to 9.75% in an emergency meeting. This decision makes the CBRT one of at least six central banks that have eased their crucial interest rates in the last week in response to worsening economic conditions occasioned by the coronavirus pandemic. 

In the rate statement, the CBRT noted that the coronavirus spread had weakened global growth outlook. It also said that this spread had prompted “coordinated expansionary measures” from central banks in developed and emerging economies. 

The CBRT also noted that it was monitoring the evolving global impact of the coronavirus outbreak on “capital flows, financial conditions, international trade and commodity prices.” 

Turkey is one of the countries affected by the coronavirus outbreak, and one of the first to impose inbound flight restrictions into its borders; a measure now being adopted by many countries including US, Canada and the Eurozone. 

The USDTRY responded positively to the development as the Turkish Lira weakened, spiking to 6.48970 after an initial jump and retracement. 

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Technical Outlook for USDTRY

The USDTRY has broken the medium-term symmetrical triangle on the weekly chart and is approaching the resistance at 6.52786 formed by the previous high of 17 September 2018. Continued upside targets 6.79475, the tops of 27 August and 10 September 2017. A further upside target lies at 7.09511 (13 August 2017 high) after which the USDTRY will be launched into its all-time highs. 

On the flip side, failure to breach the immediate resistance at 6.52786 may allow the USDTRY to experience a pullback towards the 6.24258 level, where the 6 May 2019 high is located. Below this, the upper triangle border comes into view once more, which may provide support for a further leg up. 

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