USDTRY Retests All-Time Highs As CBRT Holds Interest Rates

The Central Bank of the Republic of Turkey (CBRT) stood pat in today’s interest rate decision, leaving interest rates unchanged at 10.25% and sending the USDTRY to test all-time highs above 7.97.

This decision followed last month’s rate increase, the impact of which has since faded and given way to geopolitical and domestic fundamentals. 

The CBRT kept the 1-Week Repo Rate, Overnight Borrowing and Overnight Lending rates all steady at 10.25%, 8.75% and 11.75% respectively. The numbers disappointed the markets, which had expected a rate hike of 100 bps: a TRY-negative situation. 

Turkey’s conflict with Greece over the gas-rich Eastern Meditteranean region as well as its support for the Azeri government in the ongoing Armenia-Azerbaijan conflict over the disputed territory of Nagorno-Karabakh continue to pressurize the Lira. This allowed the USDTRY to touch all-time highs of 7.97915, before an intraday pullback. 

The pair remains 1.55% higher on the day. 

Technical Outlook for USDTRY

Today’s upside move broke the 3-day selling momentum on the pair, which had caused the ascending channel to break down and breach the support at 7.83210. Today’s bounce stemmed from the recent highs seen at 7.78688, which underwent role reversal and served as support for Wednesday’s price action.

Today’s move is now retesting the channel’s trendline, which serves as the ascending resistance following its role reversal after Tuesday’s downside violation. Price needs to push beyond this point and clear the 8.0000 psychological resistance to allow for upside continuation within the channel. 

On the flip side, rejection at the channel’s lower border may reinitiate a pullback towards the 7.83210 support, with 7.78688 and 7.70418 (former highs of 23/24 September) serving as the next downside target. 

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USDTRY Daily Chart

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