Current trend

The USD/TRY pair is trading within a long-term upward trend. This week, the quotes reached a yearly high of 33.0665 but have now dropped to 32.8889, reacting to the monetary authorities’ rhetoric.

Turkish Finance Minister Mehmet Simsek believes that the country is near a sustainable and strong disinflation process, so this year, the consumer prices growth rate will slow to 30.0–40.0%, and next year it will reach 10.0%. Earlier, the head of the Central Bank of the Republic of Turkey, Fatih Karahan, raised his forecast for the end-of-year indicator from 36.0% to 38.0%. However, according to the Turkish Statistical Institute (TürkStat), the May index increased from 3.18% to 3.37% MoM and from 69.80% to 75.45% YoY. According to Simsek, the authorities are controlling the budget deficit, which may be at 2.0–2.5% of the gross domestic product (GDP) this year, significantly lower than the previous 6.0%, and investor confidence in the department’s actions will help to recover over time. The official emphasized the priority of cooperation with the EU in trade, investment, and development of the recreation and entertainment sector. Thus, the May number of foreign tourists increased from 8.70% to 14.00%. In turn, the lira’s position was pressured by the June statistics on the manufacturing sector confidence index, which fell from 105.4 points to 102.8 points, while the economic confidence indicator adjusted from 98.20 points to 95.80 points, confirming the ongoing problems in the country.

Today, American investors will pay attention to the final GDP statistics. According to preliminary estimates, the indicator will change from 1.3% to 1.4%, unlikely to significantly support the national currency. In addition, the May durable goods orders may decrease from 0.6% to –0.1%. Tomorrow at 14:30 (GMT 2), the price index of personal consumption expenditures, a key inflation indicator for the US Fed, is due, which may decrease from 2.8% to 2.6%, increasing the likelihood of an adjustment in monetary policy during the September meeting. The regulator’s official forecasts suggest a reduction in the cost of borrowing by the end of 2024 from 5.50% to 5.10%.

Support and resistance

The trading instrument is moving within a long-term upward trend. This week, it reached the year’s high of 33.0665 but then corrected to 32.8125 (Murrey level [8/8]), where growth may resume to 33.2031 (Murrey level [ 2/8]). If the middle line of Bollinger bands 32.5000 is broken, the decline will resume to the area of ​​32.0312 (Murrey level [4/8]) and 31.8359 (Murrey level [3/8]), which is less likely.

Technical indicators maintain a buy signal: Bollinger bands are heading upward, and the MACD histogram is increasing in the positive zone. A downward reversal of Stochastic from the overbought zone does not exclude the development of a limited downward correction.

Resistance levels: 32.8125, 33.2031.

Support levels: 32.5000, 32.0312, 31.8359.

Trading tips

Long positions may be opened from 32.9000 or when the price reverses around 32.5000, with the target at 33.2031 and stop losses at 32.7000 and 32.3000, respectively. Implementation period: 5–7 days.