Last week I gave a trade idea on XAUUSD with a target around the $2,020 price line. At the time of writing, XAUUSD already exceeded the target and I’m sure that would leave a lot of people wondering what to expect next. Below, I have presented my view of how I expect the price action to turn out in the meantime.
USD/TRY May Hit 10.00 Before Year’s End
2021-10-25 • Updated
The Turkish lira has been pressed by Turkey’s central bank (CBRT). It has recently announced a bigger-than-expected rate cut: twice as deep as analysts expected. The reduction occurred after President Erdogan fired central bank officials as opposed to his intention for lower borrowing rates. Most analysts and investment banks foresee USD/TRY to exceed the psychological mark of 10.00.
Bloomberg said, “there’s now a more than 60% chance that the lira will weaken to 10 before January”. SEB AB: “Unless the central bank signals an intention to slow the cuts, USD/TRY will spike well above 10.00”.Besides, today, the Turkish lira got another headwind from President Erdogan. He claimed he had ordered the expulsion of the US and Western ambassadors.
Though lower rates can support some businesses and consumers, economists believe it also pushes the already high inflation up which can soon make the central bank change track. Actually, Turkey is alone in cutting interest rates. Other central banks all over the world are raising rates to decrease rising global price pressures.
USD/TRY has become overbought and reversed down. The pair may drop to Friday’s low of 9.59. If it manages to fall below this support level, the doors will be open to the psychological level of 9.50. The long term remains bullish. Thus, after a short pullback, it should stick to its uptrend and reach 10.00 as many analysts forecast now.
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Bearish Scenario: Selling below 22.65 with TP1: 22.34 (intraday) and TP2: 22.02 (swing). Bullish Scenario: Buying above 22.70 with TP1: 22.90.
Intraday and swing scenarios based on price action and volume profile.