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USDTRY: Selling Momentum Accelerates, Turkish CPI at 11.39%


USDTRY stabilize today after yesterday’s sharp losses amid USD weakness across the board. The USDTRY breached below the 50-day moving average, and the selling pressure might continue. A positive sign from the economy after Turkey gradually reopens, support the Turkish lira. Optimism that Turkish governments will manage to get through the coronavirus crisis alone, without a loan from the IMF also boosts sentiment.  

Turkey’s CPI at 11.39%

On the economic data from Turkey, the Producer Price Index rose to 1.54% in May from previous 1.28%, the yearly Producer Price Index (PPI) came down to 5.53% in May from previous 6.71%. The Consumer Price Index registered in at 1.36% topping the forecasts of 0.95% May and now the yearly Turkey Consumer Price Index (CPI) came in at 11.39% beating the expectations of 11%. Turkey’s interest rate is negative as it stands at 8.25% while the annual inflation runs at 11.39%. The central bank of Turkey (CBRT) in May cut the interest rates for the ninth time in a row by 50 bps to 8.25% in an attempt to boost the coronavirus battered economy. 

The Turkish economy is struggling amid the coronavirus crisis as the country faces 169 billion in foreign debt in the next year while the fx reserves are only 84 billion.   

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USDTRY Analysis

USDTRY is 0.04% higher at 6.7186, as the pair correction from the two-year highs accelerates below the 50-day moving average. The technical picture improved for the Turkish lira in the short term as the pair yesterday broke below the 50-day moving average. The long term picture remains bullish for the pair despite the recent correction. 

On the downside, initial support for USDTRY stands at 6.7112 the daily low. The next support zone stands at 6.6649 the low from April 10 trading session. More bids might emerge at 6.6259 the low from April 9.

On the other side, initial resistance for USDTRY stands at 6.7213 the daily high. If the USDTRY pair breaks higher, then the next hurdle will be met at 6.8262 the 50-day moving average. If buyers breach that level, then the next target will be met at 6.8756 the top from May 19th trading session.   

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