USD/TRY looks firmer, approaches 8.5000

• USD/TRY leaves behind four days with losses.
• Decent support emerges around the 8.4000 area

The Turkish lira relinquishes part of its recent gains and motivates USD/TRY to gain some upside traction and re-test the 8.5000 area oon Wednesday.

USD/TRY rebounds from 2-week lows

USD/TRY reverses four daily pullbacks in a row and bounces off Tuesday’s fresh 2-week lows in sub-8.4000 levels, as market participants continued to assess last week’s decision by the Turkish central bank (CBRT) to leave rates unchanged once again.

It is worth recalling that the CBRT decided to leave the One-Week Repo rate intact at 19.00% on the back of perseverant concerns over high inflation, both in Turkey and overseas. The central bank, however, gave an upbeat assessment of the economic recovery in the country mainly backed by the vaccination campaign and the strong pick up in the tourism industry.

Furthermore, the CBRT reiterated its commitment to keep the tight monetary stance, with the policy rate to be set above the inflation rate.

Extra selling pressure on the lira on Wednesday comes from the recovery in crude oil prices, considering Turkey as an importer of crude oil. Indeed, the European reference Brent crude trades with decent gains and approaches the key $70.00 mark per barrel so far.

Nothing scheduled data wise in the Turkish docket this week, although the FOMC Minutes to be released later on Wednesday are expected to be closely watched by investors.

USD/TRY key levels

So far, the pair is gaining 0.60% at 8.4818 and faces the next hurdle at 8.5805 (50-day SMA) followed by 8.6806 (monthly high Aug.11) and then 8.7974 (all-time high Jun.25). On the other hand, a drop below 8.3863 (weekly low Aug.17) would aim for 8.2921 (monthly low Aug.3) and finally 8.2803 (monthly low Jun.11).