- USD / TRY remains capped by the 14.00 hurdle.
- The 10-year yields rise to the 23.70% zone.
- Turkey’s current account posted a deficit of $ 2.68 billion.
The Turkish lira trimmed some of the recent gains and pushed the USD/TRY about 13.90 on Tuesday.
USD / TRY: The rally is still capped around 14.00
The USD / TRY trading range has narrowed considerably in recent sessions, while occasional bullish attempts on the pair remain well limited around the 14.00 zone for the time being.
The issue of the ongoing range cap on the lira comes alongside the persistent upward march in Turkey’s 10-year bond yields, which are navigating all-time highs around 23.70%.
On the national calendar, Turkey’s current account fell back into a deficit of $ 2.68 billion in November. Likewise, the Construction Cost Index increased 48.87% year-on-year also in November and 7.94% compared to the previous month.
What to look for around TRY
The ongoing recovery in the pair appears to have encountered strong initial resistance at the 14.00 zone so far. Higher-than-expected inflation figures released earlier in the year put the lira under additional pressure combined with some cracks in confidence among Turks regarding the government’s recently announced plan to promote de-dollarization of the economy. Meanwhile, the reluctance of the CBRT to change course and the pervasive political pressure to favor lower interest rates in the current context of rampant inflation and (very) negative real interest rates are forecast to keep the domestic currency under intense pressure from the moment.
Technical levels
So far, the pair is gaining 0.49% at 13.8429 and a drop below 12.7523 (weekly low on Jan 3) would pave the way for a test of 12.1247 (55-day SMA) and finally 10.2027 (monthly low on Jan 23). from December). On the other hand, the next rising barrier is lined up at 13.9319 (Jan 10 high) followed by 18.2582 (Dec 20 all-time high) and then 19.0000 (round level).
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