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.
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