The USDTRY pair holds in narrow consolidation on Wednesday, after 8 straight days in red, which resulted in break below key supports at 5.8097 (daily cloud base) and 5.6875 (16 Aug low of pullback from new all-time high).
Violation of 5.6875 pivot could be a key if the pair manages to sustain break, which could result in further correction of 4.5121/7.1043 rally) and expose its Fibo 61.8% level at 5.0353.
Daily techs in bearish mode support scenario, but bears may take a breather and signal hesitation at 5.6875 support on overbought slow stochastic.
On the other side, risk of recent downtrend stall exists, as Turkish lira stands on shaky ground.
CBRT’s ultra-tight monetary policy could have a negative impact, as Turkey’s GDP has slowed, data showed contraction in the economy as industrial production is the weakest in two years, inflation rising above interest rates and high unemployment which could contribute in slowing down lira’s recovery from record lows.
Adding to negative signals are higher oil prices and Fed’s intention to further increase interest rates.
Weekly close will be closely watched as close below daily cloud would add to positive signals for lira, with corrective actions to be ideally capped by cloud base.
Res: 5.7152, 5.8097, 5.9040, 5.9354
Sup: 5.6617, 5.5336, 5.5035, 5.4242
