USD/TRY: Struggles To Defend Turkish Lira Bears, Focus On CBRT, Fed Powell’s Testimony

USD/TRY fade bullish bias as it seesaws around 23.60 heading into Tuesday’s European session. In doing so, the Turkish Lira (TRY) pair fails to refresh the all-time high mark in the last week as traders fear a bearish surprise for the pair.

That said, the new appointment of Hafize Gaye Erkan as the new Governor of the CBRT and former economy chief M. Simsek as the new Finance Minister, as well as Turkish President Recep Tayyip Erdogan’s readiness to relinquish rate controls, allow CBRT hawks to remain hopeful.

Notably, chatters witnessing a CBRT rate hike to 20% from the current 8.5% gain significant attention and prod the USD/TRY traders. Reuters quotes JP Morgan’s report suggesting the Turkish central bank’s rate lift to 25%.

Apart from the CBRT moves, Fed Chair Jerome Powell’s bi-annual testimony will also be essential to watch for the USD/TRY activities.

While the CBRT will likely offer a wild move on Thursday, Fed Chair Powell’s Testimony and second-tier US/Turkish data will entertain the traders ahead of that. A strong rate hike from the Central Bank of the Republic of Türkiye (CBRT) could trigger a downside break of the 23.00 key support, challenging the previous all-time high of around 21.00.

Additionally, the inflation pressure is much higher in Turkiye than in the US, so the odds of witnessing a heavy rate hike from the CBRT and the USD/TRY’s slump can’t be ruled out.

Technical Analysis

USD/TRY bulls fade upside momentum amid easing bullish MACD signals and overbought RSI conditions. However, the Turkish Lira pair sellers need validation from 23.10 and CBRT to convince bears.

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