USD/TRY: Breach of the 7.40 level will strengthen the downside bias – Rabobank

The Turkish lira has appreciated further after the Turkish Central Bank (CBRT) hiked interest rates by 475 basis points, pushing the USD/TRY 2.2% lower. The Rabobank FX Analysis Team expects monetary policy divergence to strengthen the lira in the mid-tern and points out to 7.40 as the next key level.

Key quotes

“The newly appointed Governor Agbal made an important step in restoring the CBRT’s credibility by raising the policy rate by 475bps to 15% at today’s meeting. The central bank also simplified the framework of monetary policy as all funding will be provided through the 1-week repo rate.”

The 475bps hike to 15% still makes the lira one of the highest yielding EM currencies. Demand amongst carry trade investors, who profit from substantial interest rate differentials, should improve after the CBRT decided to act and indicated that interest rates will remain high for an extended period of time until inflation converges with the official target.”

“The downside bias in USD/TRY remains intact and the next important level to watch comes at 7.40, as figure 2 illustrates. A break lower would strengthen the bearish bias with a cluster of technical levels at 7.26/23 as next targets.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

AUD/USD: Bulls cheer risk-on mood to attack 0.7400 ahead of China PMI

AUD/USD stays positive, wavers between 0.7381 and 0.7392 off-late, around three-month high. Vaccine hopes, US dollar weakness favor the bulls, Brexit jitters, virus woes and Aussie-China tussle test the upside momentum.


USD/JPY: Off intraday high near 104.00 on upbeat Japan Industrial Production, Retail Sales

USD/JPY trims early-Asian gains, drops for the fifth consecutive day. Japan’s October month Retail Sales, Industrial Production prints upbeat results. China PMIs, risk catalysts to remain as the key drivers.


Gold: Vaccine hopes weigh on XAU/USD below $1,800

Gold fades late-Friday’s recovery moves from $1,774. The yellow metal fades the bounce off the early-July top, marked on Friday. Risk tone remains positive amid vaccine hopes, mixed clues over Brexit deal.

Gold news

WTI: March top lures the bulls as OPEC struggles over output hike

WTI keeps upside break of 61.8% Fibonacci retracement, nears highest in nine months. OPEC struggles to agree over output even as some participants back a delay in the production hike.

Oil News

Black Friday 2020 Discounts!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info