USD/TRY: Limited Downside Seen as CBRT Holds Rates

Summary:

The CBRT keeps interest rates unchanged at 19.00%, giving the Turkish Lira some room at a limited upside against the greenback. The USD/TRY is down 0.19%.

The USD/TRY is slightly lower after the Central Bank of the Republic of Turkey (CBRT) left the key one-week repo rate unchanged at 19.00%, as widely expected by analysts. In explaining the bank’s decision, the rate statement issued by the CBRT governor said that the bank took into account the high levels of inflation and inflation expectations in deciding to keep the tight monetary policy stance until there was a “significant fall” in Turkey’s inflation forecast.

The statement further stated that the policy rate would be held at a level above inflation, stating that high inflation expectations posed risks to the inflation outlook and pricing behaviour. The Lira caught a mild tailwind on the news and is up against the greenback by 0.91% as of writing.

USD/TRY Technical Outlook

The pair has violated the 8.57488 support level on the back of the CBRT decision. This support needs to be comprehensively taken out for the price to head towards the next support level at 8.49435. Subsequent support levels exist at 8.4000 (psychological support), 8.29080 (11 June and 3 August lows) and 8.19744. A deeper correction could target these.

On the flip side, failure to break the 8.57488 support allows the USD/TRY to retest the channel’s lower edge with a return move. If that edge gives way, the price would have some leeway to push towards 8.74610. Uncapping this resistance opens the door towards 8.8000 (22/25 June highs), and if that level is cleared, new all-time highs could form around the 8.95736 price mark (78.6% Fibonacci extension level).