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USDTRY Market Update

1/27/2023 11:04 AM

During the Asian session, the USD/TRY pair is actively growing, testing the 18.80 mark for a breakout after the publication of positive US macroeconomic statistics. Despite expectations of a more noticeable contraction to 2.6%, Q4 gross domestic product (GDP) fell from 3.2% to 2.9%, which raised analysts' doubts about the upcoming decision of the US Federal Reserve on monetary policy on February 1. However, as the main scenario, experts still consider an increase in the interest rate by only 25.0 basis points.

The head of the Central Bank of the Republic of Turkey, Shahap Kavcioglu, said that the regulator left its previous estimates on consumer price dynamics unchanged in 2023 at 22.3% and in 2024 at 8.8%. The official emphasized the need to follow the monetization strategy, while the rate of appreciation in lending will be in line with the target inflation rate to maintain financial stability: in December, the rate fell from 84.39% to 64.27%, although the interest rate did not increase. UN forecasts also confirm positive expectations: the presented report assumes a slowdown in price growth to 42.4% by the end of the year, while the economy may strengthen by 3.7%.

On the daily chart, Bollinger Bands are rising steadily: the price range is narrowing, reflecting the ambiguous nature of trading in the short term. The MACD reversed upwards but still keeps a sell signal (the histogram is below the signal line). Stochastic has taken a horizontal direction, being located near "80" and indicating that the US dollar may become overbought in the ultra-short term.

Resistance levels: 18.8000, 18.8500, 18.9000, 19.0000. | Support levels: 18.7500, 18.6815, 18.6390, 18.6000.

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