Current trend

The USD/TRY pair has been actively growing since the end of May after Recep Tayyip Erdogan was re-elected as president of Turkey, and now the quotes are held around the 26.0354 mark.

Investors were confident in the continuation of the ultra-soft course of monetary policy, despite the strong inflationary growth, however, at the June meeting of the Central Bank of Turkey, it was decided to raise the discount rate from 8.50% to 15.00%, which was evidence of the transition to a more traditional monetary approach. After that, the dynamics of the pair seriously slowed down, and the price has been trading around the 26.1000 mark for about two weeks. It should be noted that Finance Minister Mehmet Simsek this week announced the likelihood of a further increase in the interest rate and the government's desire to return the inflation rate to a single digit value. Recall that in June, on an annualized basis, the consumer price index in the country decreased from 39.59% to 38.21%, but is still too far from the targets adopted by Turkish officials.

Despite the positive signals, the lira has only stabilized so far, but has not begun to strengthen against the background of a likely increase in the interest rate in the USA. According to the minutes of the last meeting published this week, the monetary authorities intend to resume the cycle of tightening monetary policy, albeit at a slower pace than before. The probability of adjusting the value increased significantly after the June employment data from Automatic Data Processing (ADP), which recorded a serious increase of 497.0K. If the federal data also show a significant increase in the indicator, a new increase in the US Fed interest rate will become almost inevitable, and the US currency will be able to strengthen its position against its main competitors.

Support and resistance

Technically, the price has consolidated above the mark of 25.7812 (Murray level [ 1/8]) and may continue to rise to the levels of 26.5625 (Murray level [ 2/8]), 27.3437 (Murray level [6/8], H4) and 28.1250 (Murray level [8/8] for H4). The key for the "bears" is the level of 25.0000 (Murray level [8/8]), supported by the middle line of the Bollinger Bands, its breakdown will allow the quotes to develop a decline to the level of 23.4375 (Murray level [6/8]).

Technical indicators signal the continuation of the uptrend: the Bollinger Bands are directed upwards, the Stochastic is horizontal in the overbought zone, the MACD histogram is decreasing in the negative zone.

Resistance levels: 26.5625, 27.3437, 28.1250.

Support levels: 25.0000, 23.4375.

Trading tips

Long positions can be opened at the current price with targets at 27.3437, 28.1250 and stop-loss in the area of 25.5000. Implementation period: 5-7 days.

Short positions can be opened below 25.0000 with a target at 23.4375 and stop-loss in the area of 25.6000.