Current trend

The USD/TRY pair is recovering, testing the mark of 34.1165, while market activity is decreasing as the meetings of the US Federal Reserve and the Central Bank of the Republic of Turkey on monetary policy approach this week.

Tomorrow at 13:00 (GMT 2), investors will focus on the results of the meeting of the Turkish regulator: it is predicted that the interest rate will again be maintained at 50.0%, the maximum level since 2002, at which it has been since March, in order to influence the rapid pace of inflation. It is worth noting that the effect of the measures taken by the financial authorities is already evident: in August, the consumer price index fell from 61.78% to 51.97% YoY and from 3.23% to 2.47% MoM, and the Turkish government expects that by the end of the year it will reach 40.0%. At the same time, the country's gross domestic product (GDP) increased by 2.5% in the second quarter, with a forecast of 3.2% — economic growth slowed by half compared to 5.3% over the past three months, while domestic consumption increased by 1.6% in the second quarter, while at the beginning of the year the indicator grew by 6.8%. Against this background, economists surveyed by Dünya newspaper believe that by the end of the year, the cost of borrowing can be adjusted to an average of 46.65%. According to analysts' forecasts published earlier, the regulator will begin to reduce the parameter in September-October after a significant slowdown in inflation is confirmed (in August it amounted to 51.97% YoY). The head of the Central Bank of the Republic of Turkey, Fatih Karahan, previously stated that by the end of the year the indicator would drop to 38.0%, while Finance Minister Mehmet Simsek did not rule out its retention in the range of 38.0-42.0%.

The US currency also slowed down on the eve of the publication of the results of the two-day meeting of the US Federal Reserve, which will be presented today at 20:00 (GMT 2). The main scenario, as before, assumes a reduction in the interest rate by a minimum of 25 basis points, but the probability of adjusting the value by -50 basis points is actively increasing and at the moment, according to the readings of the Chicago Mercantile Exchange (CME) FedWatch Tool, is 65.0% compared with 30.0% last week. At the same time, in the accompanying statement of the regulator, investors expect to hear signals for an additional change in the parameter before the end of this year. The revision of forecasts regarding the volume of adjustments may be a reaction to Friday's statements by the head of the New York Federal Reserve Bank (FRB), John Williams, who almost openly stated that a reduction in the cost of borrowing is necessary, and the key parameters that can affect this, that is, the labor market and inflation, are at stable levels sufficient for this.

Support and resistance

A corrective trend in the asset is forming on the H4 chart, within which quotes are held near the resistance line of the "expanding formation" pattern with boundaries of 34.1000–33.6000.

Technical indicators maintain a stable buy signal: the range of EMAs fluctuations on the Alligator indicator remains directed upwards, and the AO histogram remains in the buy zone, forming new correction bars.

Support levels: 33.9560, 33.6500.

Resistance levels: 34.1000, 34.4000.

Trading tips

In case of continued growth of the asset, as well as consolidation above the resistance level of 34.1000, buy positions with a target of 34.4000 will become relevant. Stop-loss – 33.9000. Implementation period: 7 days and more.

In the event of a reversal and decline of the asset, as well as price consolidation below the support level of 33.9560, one can open sell positions with a target of 33.6500. Stop-loss – 34.1000.