Current trend

The USD/TRY pair is trading at 3264.35 supported by positive inflation statistics in Turkey but the long-term trend in the asset remains upward.

Thus, the June consumer price index fell from 3.37% to 1.64% MoM with a forecast of 2.22%, the low since May 2023, and from 75.45% to 71.60% YoY compared to expectations of 72.60%. The core indicator, which does not consider food, energy, alcohol, tobacco products, and gold, adjusted from 72.99% to 70.4% YoY and from 3.77% to 1.9% MoM. Commenting on the statistics, Turkish Finance Minister Mehmet Simsek noted that the country began the disinflationary trend amid effective monetary policy, with officials achieving success in many areas, such as financial stability, a sustainable current account deficit, and reserve accumulation.

In addition, the Financial Action Task Force’s (FATF) decision to remove the country from the list of jurisdictions under enhanced supervision, which it has been under since 2021, may act as a catalyst for increased foreign investment and interest in lira-denominated assets and have a positive impact on borrowing costs, further accelerating the slowdown in consumer price growth. FATF officials noted that deficiencies were noted in supervision in sectors such as banking, gold and precious stones, and real estate, and these have now been corrected as more sophisticated investigations and prosecutions are carried out. The removal from the grey list could help attract up to 1.1T dollars to the country’s economy.

On Thursday, US trading floors were closed for the Independence Day holiday, and today, traders will turn their attention to the labor market report. The June nonfarm payrolls may change from 272.0K to 190.0K, while average hourly earnings from 4.1% to 3.9% YoY and from 0.4% to 0.3% MoM. The unemployment rate may remain at 4.0%. The statistics may allow US Fed officials to decide on monetary policy before the end of the year, while market forecasts suggest one or two full-fledged interest rate cuts by 25 basis points.

Support and resistance

The trading instrument is trying to resume growth within the long-term upward trend after the downward correction of the last week. The price dropped to the middle line of Bollinger bands but could not consolidate below it and began to restore lost positions. Currently, the quotes are close to 32.8125 (Murrey level [8/8]). After a breakout, an upward trend may develop to the target of 33.2031 (Murrey level [ 2/8]). In case of a breakdown of 32.4218 (Murrey level [6/8]) under the middle line of Bollinger bands, the decline will resume to the area of ​​32.0312 (Murrey level [4/8]) and 31.8359 (Murrey level [3/8]).

Technical indicators confirm that the market continues to trend upward: Bollinger Bands are pointing upwards, Stochastic reverses upwards from the oversold zone, and the MACD histogram is stable in the positive zone.

Resistance levels: 32.8125, 33.2031.

Support levels: 32.4218, 32.0312, 31.8359.

Trading tips

Long positions may be opened above 32.8125, with the target at 33.2031 and stop loss 32.6000. Implementation period: 5–7 days.

Short positions may be opened below 32.4218, with the targets of 32.0312, 31.8359 and stop loss 32.7000.