USD/TRY outlook: Turkish lira fell to new record low after CBRT's shock 2% rate cut

Slobodan Drvenica Windsor Brokers

USD/TRY

The USDTRY rose over 2% in immediate reaction to CBRT’s surprise decision to cut rates by 200 basis points from 18% to 16%.

Most economists were betting for a 0.5% cut this time after the central bank cut rates by 1% last month.

The decision pushed the lira to the new record low against the US dollar, in the biggest one-day fall since mid-June.

Analysts think that the move is consistent with the view of President Erdogan, who has replaced most of the bank’s top leadership this year, and describes the latest CBRT actions as simply wrong, as the real economy is getting hurt by the currency.

The steep rally that commenced from June-Sep higher base, when larger bulls consolidated, is pressuring round-figure barrier at 9.50, with risk of extension towards Fibo projections at 9.6238 (161.8%) and 9.8700 (176.4%) with psychological 10.00 level coming in focus on the strongly weakened sentiment.

Corrective dips on overbought daily/weekly studies are likely to be shallow and expected to provide better levels to join the uptrend.

Res: 9.5000; 9.6238; 9.8700; 10.0000.
Sup: 9.3537; 9.3000; 9.2258; 9.1700.

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD trims gains, back below 1.1800

EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.

GBP/USD off highs, recedes to the sub-1.3500 area

Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.

Gold climbs to weekly tops, approaches $5,100/oz

Gold keeps the bid tone well in place at the end of the week, now hitting fresh weekly highs and retargeting the key $5,100 mark per troy ounce. The move higher in the yellow metal comes in response to ongoing geopolitical tensions in the Middle East and modest losses in the US Dollar.