By Greg Holden
Shifting regional dynamics have helped move capital away from the various Arab states in the Middle East and into the relatively more stable countries in the region, such as Turkey. This appears to be pushing the Turkish lira higher.
The USD/TRY has been range-trading for the last few days between 1.5700 and 1.6200. However, the longer-term technical signals appear to be suggesting an impending upturn for the lira.
On the technical side, we can see on the chart below that the pair recently breached the 61.8% Fibonacci line, but has so far failed to find sufficient support to remain above that price mark. The pair has already begun to descend back towards the now-support level of 1.5612.
Our technical oscillators also support this downturn. The Relative Strength Index (RSI), shown below, has the price floating deep within the over-bought region, suggesting downward pressure is building. The Stochastic (slow) also shows a fresh bearish cross followed by a descending price pattern, highlighting the momentum of the downswing.
On the fundamental side, regional investment flows appear to be fleeing the unstable regimes of Egypt, Tunisia, Yemen, Iran, and Bahrain and giving an added edge to the more stable countries in the Middle East, predominantly Turkey.
Moreover, analysts appear to be in agreement that Turkey will cease hiking lending rates as its central bank has remarked on its alignment with other international interest rates and growth targets. Various Turkish organizations, such as Acerlik and Halkbank, have also posted respectable levels of quarterly profits (31% and 18% growth, respectively).
If the current movement continues bearish below the 61.8% level, the next downward target rests just above 1.4800, marked by the 50% retracement line.
USD/TRY – Weekly Chart
Forex Market Analysis provided by ForexYard.
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