The USDTRY is presently in a choppy trade mode after mixed economic data emanated from Turkey this morning. Turkey’s retail sales figures rose by 0.3% in August. The figure was a vast improvement on the July figure, which had registered a disappointing 1.5% decline.
However, the unemployment rate also rose to 13.9%, which was a 0.9% increase over the previous month’s figure. The contrasting data allowed the Turkish Lira recover from Monday’s 1-1/2 month lows in an initial response. These gains were however quickly eroded, leaving the USDTRY in a choppy state.
USD/TRY is currently trading lower at 5.8866, having hit a high of 5.9384 on Monday, its highest levels since August 26 on the back of sanctions threats by US President Donald Trump.
The USDTRY’s advance to its highest levels since May came as a result of Donald Trump threat rhetoric against Turkey in which he was quoted as saying “big sanctions on Turkey coming…”
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Technical Outlook for USDTRY
The weakness of the Turkish Lira against the greenback is captured in the USDTRY’s uptrend movement. The USDTRY has been contained in an up channel for a while, but today’s retracement is starting to challenge the lower trendline of this channel (the channel trendline).
The immediate resistance is seen at the 23.6% Fibonacci trendline (trace from swing low of Sep 30 to swing high of October 14). This is also where today’s immediate post-news reaction found support.
A successful break of the channel trendline could push down towards the 38.2% Fibo retracement level (5.8233), where price has found support for several days this month. However, 5.8466 (highs of October 7-11) may prove to be a pitstop as this price level could act in role reversal. Below this level, 5.7863 may also become a relevant support area. This is where price made lows on October 8, and is also the site of a previous resistance formed by September 11 highs acting in role reversal.
A failed break of the trendline or a bounce from the 23.6% Fibonacci level could see further weakening of the Turkish Lira, allowing price target the highs of the month at 5.9382 as the initial resistance.