USD/TRY: 9.00 appears a tough nut to crack but lira remains vulnerable

  • USD/TRY sits at record highs after last week’s CBRT surprise rate cut.
  • Price could pull back amid overbought conditions on the daily chart.
  • Impending bull cross suggests buying the dips for USD/TRY traders.

USD/TRY finds stiff resistance at $8.90 and recedes from near-record tops, pausing the three-day uptrend this Monday.

The Turkish lira crumbled last week, falling to the lowest levels ever posted on record after the Central Bank of the Republic of Turkey (CBRT) unexpectedly cut its benchmark interest rate by 100 basis points to 18% on Thursday.

Markets view this surprise as negative, as the unexpected rate cut underscores the Turkish central bank’s fragile credibility, which continues to weigh on the lira. However, the risk-on mood-led broad US dollar weakness is seen saving the day for lira optimists for the time being.

At the time of writing, USD/TRY trades almost unchanged on the day at $8.86, having recorded all-time highs at $8.8968 on Friday.

From a near-term technical perspective, USD/TRY appears to take a breather amid overbought conditions showcased by the daily Relative Strength Index (RSI).

However, any dip in the USD/TRY price could be seen as a good buying opportunity, suggested by an impending bull cross, which if materialized could signal buying resurgence.

The 21-Daily Moving Average (DMA) has cut through the 50-DMA for the upside but traders await confirmation on a daily closing basis.

USD/TRY: Daily chart

On the upside, the 9.00 threshold needs to be cleared to head towards the 9.50 psychological level.

Meanwhile, any retracement could see initial demand emerging at Friday’s low of 8.76. The next downside target is seen at around 8.60, the round number.

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