- USD/TRY trades on the defensive near 8.7300.
- The lira regains some composure following recent record lows.
- Turkey is forecast to have expanded around 20% in Q2.
The Turkish lira manages to regain some composure and now drags USD/TRY to the 8.7300 region on Monday.
USD/TRY off all-time highs
After clinching new all-time highs in the 8.800 zone last week, USD/TRY now gives away part of that advance and briefly tested the 8.7100 zone, where some support seems to have turned up.
In fact, the lira manages to regain some ground lost despite the broad-based upbeat tone in the dollar at the beginning of the week.
The lira’s better mood follows the uptick in yields of the Turkish 10-year note, which regain the 17% hurdle and leaves behind some of the recent weakness.
On another front, Turkish finmin L.Elvan said on Friday that he expects the domestic economy to have expanded by around 20% in Q2, crushing the government’s forecasts for a nearly 6% expansion in the same period. Elvan justified the strong prediction exclusively on base effects.
What to look for around TRY
The outlook for the Turkish lira remains fragile despite the steady hand from the Turkish central bank (CBRT) at its recent meetings. Despite inflation appears to have peaked in April, it still remains (very) high and a move on rates in the short-term horizon seems to have lost some motivation for the time being. In the meantime, political effervescence within the ruling AK Party, the impact of the pandemic on the economic outlook, high unemployment and the so far utter absence of any intentions to implement the much-needed structural reforms remain poised to keep the lira under perseverant pressure for the foreseeable future.
Key events in Turkey this week: June Economic Confidence (Tuesday) – Trade Balance (Wednesday) – Manufacturing PMI (Thursday).
Eminent issues on the back boiler: Potential US/EU sanctions against Ankara. Government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Much-needed structural reforms. Growth outlook vs. progress of the coronavirus pandemic. Capital controls? The IMF could step in to bring in financial assistance.
USD/TRY key levels
So far, the pair is losing 0.44% at 8.7123 and a drop below 8.5953 (weekly low Jun.23) would aim 8.4439 (50-day SMA) and finally 8.2803 (monthly low Jun.11). On the upside, the next resistance is located at 8.7974 (all-time high Jun.25) ahead of 9.0000 (round level).
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.