Lira remains on the defensive around 13.50 ahead of CBRT rate decision

  • USD/TRY remains stuck around 13.50, eyes a range breakout CBRT decision.
  • CBRT is seen keeping rates on hold at 14%, halting its easing cycle.
  • USD/TRY’s path of least resistance appears to the upside, graphically.

USD/TRY is maintaining its prison range around 13.50 so far this week, awaiting a clear directional impetus from the Turkish central bank’s (CBRT) monetary policy decision.

The central bank is due to announce its rate decision at 1100 GMT later on Thursday, with markets expecting the CBRT to hold steady on its key policy rate at 14% in January.

The policy announcement comes a day after Turkey’s President Tayyip Erdogan called on the citizens and companies to convert their foreign currency savings into Turkish lira. The Turkish authorities continue to unveil new measures, in a desperate move to support the beleaguered lira.

The domestic currency lost roughly 45% of its value in 2021, having hit a record low of 18.36 in December. At the time of writing, the pair is trading a better bid at 13.51, with the upside seen as the path of least resistance, as per the daily chart.  

USD/TRY: Technical outlook

Looking at USD/TRY’s technical chart, the pair is trading listlessly, well above the slightly bullish 21-Daily Moving Average (DMA) at 13.07. Just below the latter, the ascending 50-DMA aligns, making the 13.00 round level strong support.

If the CBRT decision cheers the lira bulls, then the spot can decisively break the abovementioned support, opening flooring for a test of the upward-sloping 100-DMA at 11.00.

On the upside, if the CBRT’s status-quo fails to offer any conciliation to the local currency, then the pair could break higher for a retest of the 14.00 level.

Acceptance above the latter is critical to resume the recovery from near 10.50 levels.

The 14-day Relative Strength Index (RSI) is holding steady above the midline, suggesting that the upside bias appears more compelling.

USD/TRY: Daily chart

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