By Greg Holden – Following with the pattern of growing USD strength, it appears the Turkish lira can be added to the list. The USD/TRY has risen 0.5% over the past few days following a move by Ankara to curb liquidity by raising bank reserve requirements from 5.5% to 6.0%.
Bank lending in Turkey has grown at an average of 0.8% per week since January and there is a growing concern that banks may be overextending themselves in an effort to fuel growth. The result of this latest move by Turkey’s central bank was a sharp depreciation of the lira against the dollar.
The pair has moved from a price of 1.4008 just two weeks ago, upward to a current price of 1.4616. We can see on the chart below that the pair reached a significant support level near 1.4012, but failed to breach. The RSI and Stochastic (slow) both recently displayed bullish indicators and are currently both moving in a bullish direction, which suggests growing upward momentum for the pair.
If we follow the signals being shown on this chart, and support it with the fundamental devaluation taking place in Turkey, we can assume that this pair will be targeting the 50% Fibonacci level near a price of 1.4804 over the next few trading days. If momentum remains constant beyond that level, we could also see an extension of these bullish gains upward into the 1.50’s.
USD/TRY – Weekly Chart
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