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Lira is Again Under Pressure from the Actions of the Central Bank of Turkey

10/27/2022 12:12 PM

During the Asian session, the USD/TRY pair showed mixed trading, consolidating around 18.6000. Today the US dollar is trying to grow, but the "bulls" could develop a positive momentum in response to the pressure of weak macroeconomic national statistics.

The day before, investors drew attention to the fall in sales of new homes in September by 10.9% after rising by 24.7% last month, with a forecast of –13.9%. Despite some price slowdown, home prices remain too high, and demand is declining markedly as mortgage rates rise, currently approaching 7.0%. At the same time, US Federal Reserve officials are increasingly speaking out about the country's alarming slowdown in economic growth.

The Lira remains under pressure from the Central Bank of Turkey's ultra-soft policy, which once again adjusted its weekly repo rate from 12.0% to 10.5%, despite inflation hitting a 24-year high of 83.45%. According to Goldman Sachs, the currency has lost 50% in value against the US dollar in just a year, with some reduction in the current account deficit in August driven by tourism receipts, but still at a record 3.1B dollars. The "dovish" monetary policy of the financial authorities is associated with the instructions of President Recep Tayyip Erdogan, who believes that high rates are a catalyst for higher loans, reflected in prices, which, in turn, accelerates inflation.

Bollinger bands on the daily chart demonstrate flat dynamics: the price range changes slightly, limiting possible fluctuations of the currency trading instrument. The MACD indicator gradually decreases, keeping a weak sell signal (the histogram is below the signal line). Stochastic, which approached its highs last week, is again inclined to moderate decline.

The current readings of the indicator do not contradict the further development of the "bearish" trend in the nearest time intervals.

Resistance levels: 18.6343, 18.7500, 18.8500, 19.0000. | Support levels: 18.5000, 18.3737, 18.3000, 18.1500.

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