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Price Velocity Upwards Builds on Lack of Confidence

The USD/TRY is trading at record apex heights this morning, and price velocity in the currency pair has become rather extreme as resistance proves weak.

The USD/TRY is challenging record highs as financial institutions show a lack of confidence in the aftermath of the reelected Turkish government.   The outcome of the leadership vote was not surprising, and in the weeks leading up to the vote conducted on the 28th of May the trend in the USD/TRY was undeniably higher.

While the citizens of Turkey have elected their chosen leadership, financial institutions are voting with their pocketbooks and showing no trust in the government’s fiscal management.  Not only has the USD/TRY easily penetrated the 20.00000 level, it has also continued to climb higher and as of this writing this morning is near the 20.75000 ratio. The speed of the climb should make Turkey nervous.

Price velocity upwards in the USD/TRY is beginning to look suspiciously like a ‘failing’ currency. While the situation in Turkey is not like Argentina or Venezuela, the Turkish Lira and South African Rand are showing comparable signs of distrust by financial institutions. The USD/TRY was trading around the 16.30000 ratios at this time last year. The loss of value in the Turkish Lira is nearly 20 percent in the past year. The combination of faulty fiscal policy in Turkey and the rhetoric from the U.S. Federal Reserve is not making for a solid outcome for the Turkish Lira.

The direction of the USD/TRY looks like it is a consistent incremental climb higher and will certainly attract the attention of traders, but questions must be asked to potential brokers. Traders must find out the total transaction costs they will face when pursuing the USD/TRY. Spreads could be wide, thus entry price orders are urged.

Speculators also need to know what the overnight carrying fees will be if there is a temptation to pursue a trade over a couple of days. Stop loss and take profits numbers are encouraged too. The USD/TRY certainly looks like it will continue to trend higher, but the short-term will always see some reversals lower during the day’s trading session. There are sudden momentary spikes downward which are sometimes demonstrated in the USD/TRY, which can prove devastating, making the pursuit of the currency pair rather risky.

  • The U.S. will release its Non-Farm Employment Change numbers on Friday Average Hourly Earnings.
  • Some Federal Reserve officials spoke about the potential to pause interest rates in June yesterday, but the jobs numbers and inflation results tomorrow will impact the outlook in an important way.

Current Resistance: 20.77000

Current Support: 20.71750

High Target: 20.83100

Low Target: 20.67420


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