- Summary:
- USDTRY has largely plateaued in September, but the current market sentiment favours the dollar's gains to be subdued. Find out why.
The Turkish lira retreated against the US dollar on Wednesday, with the USDTRY pair going down by 0.2 percent to trade at 33.99. The currency pair has plateaued in September on improving Turkish macroeconomic data and expectations of Fed interest rate cuts. It faces resistance around the psychological round figure of 34.00.
What’s influencing USDTRY exchange rate?
Monthly headline CPI rate fell to 2.47 percent in August , exceeding the median forecast rate of 2.64. The annualised equivalent came in at 51.97 percent, and is expected to fall steadily to about 35 percent by the end of the year. The focus on Wednesday will be on US CPI figures, expected to influence Fed interest rate decision making on September 18.
The USDTRY pair still trades above the 20,50,100 and 200 Exponential Moving Average (EMA) levels, signaling strong bullish control. However, with inflation cooling in Turkey and the Fed expected to announce as many as three interest rate cuts for the remainder of the year, demand for the dollar could start declining in the coming weeks.
Meanwhile, credit ratings agency, Fitch, last week upgraded Turkey’s Issuer Default Rating from “B+” to “BB-“. The upgrade was attributed to improved domestic fiscal outlook and stronger cushion against external pressures. That will provide support to the lira and limit the upside for USDTRY.
USDTRY prediction today
USDTRY will likely extend the upside if the pair stays above the 33.99 pivot. That will likely see the bulls head further up to encounter the first resistance at 34.02. However, if they manage to strengthen their buying momentum, they could break above that level to test 34.05.
Alternatively, moving below 33.99 will favour the sellers to take control, with the first support likely to be at 33.97. That said, the downside could go further if the bears extend their control and breach the first support. That could invalidate the upside narrative and potentially test 33.95.
