Healthy Signs of Normalization for the Turkish Lira

As of this writing the USD/TRY is trading near a high of 26.05570 and continues to stay within sight of its historically high values. 

The USD/TRY rocketed higher late last week and mounted another climb on Monday, but since this move upwards a rather calm currency market has suddenly developed.

As of this writing the USD/TRY is trading near a high of 26.05570 and continues to stay within sight of its historically high values.  Yes, the USD/TRY saw another surge upward start on last Thursday, continue into Friday, and was then followed by another dose of buying this Monday. But here’s where things get interesting, the USD/TRY has truly shown a stable currency exchange rate since Monday. The high for that day came late, but almost matches the price of the USD/TRY at this moment.

The announcement of a new banking chief by Turkish leadership has been a step in the right direction which has allowed financial institutions the ability to consider Turkey is taking measures to alter its bewildering central bank policy which has been pursued the past handful of years. While one week of returns in the USD/TRY is not enough to start a parade, and a healthy dose of questions remains valid, the ability of the currency pair to seemingly hit a higher level and remain tranquil is welcomed.

In the face of a sudden turnaround in central bank policy from the Turkish government, speculators need to consider the notion that the one-way street upwards may no longer be demonstrated with power. However, one week does not equate to one year of solid economic policy, it doesn’t even equate to one month of solid returns, and thus speculators can and should remain somewhat skeptical until solid central bank policy for the Turkish Lira is pursued into the mid and long-term.

Traders who have blindly been buying the USD/TRY, and looking for upside momentum, certainly have to shift their outlooks. It is quite apparent the ability to buy the USD/TRY and anticipate it to go higher within a few days is likely coming to an end. Traders may actually have to look at technical charts and anticipate the possibility the USD/TRY could – gasp – produce bearish momentum. Perhaps we aren’t there quite yet regarding the potential of solid downturns in the USD/TRY, but if central bank policy in Turkey is allowed to do their job properly, a return of health for the Turkish Lira could develop.

• Speculators may want to sit on the sidelines over the next handful of trading days to watch how the USD/TRY continues to trade.
• If the USD/TRY demonstrates real consolidation, a new day may actually be upon the Turkish Lira for the coming months and speculators will have to adjust their trading tactics.

Current Resistance: 26.06000

Current Support: 26.01000

High Target: 26.09000

Low Target: 25.07000

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