- Summary:
- Geopolitical risks are setting the USDTRY on the path towards new record highs above 8.0000 as geopolitical risks in the East Mediterranean escalate.
Turkey’s involvement in the escalating Azerbaijan-Armenian conflict weighs heavily on the Lira, as the Turkish currency looks set to clock the 8.000 mark after it fell further against the greenback on Thursday.
Despite the rate hike of two weeks ago by the Central Bank of the Republic of Turkey (CBRT), the Lira remains under severe pressure as the battle over the disputed Nagorno-Karabakh conflict rages.
Turkey supports the Azeris and has announced plans to test the new Russian S-400 missile defence system, which is adding to the escalation surrounding the conflict. Tensions with Greece are also on the rise over maritime rights in the Eastern Meditteranean. In September, Greece announced a massive arms purchase that included 18 French Rafale fighter jets and four naval helicopters.
The USDTRY is now trading close to all-time high levels. It is threatening to breach the 8.0000 price level for the first time in its history. The Turkish Lira has so far lost a quarter of its value to the USD this year, making it the 2nd worst performing emerging market currency behind Brazil’s Real.
The USDTRY currently trades at 7.93840 or nearly 2.5% higher on the day.
Technical Outlook for USDTRY
The pair looks set to break into the 8.0000 price territory at any moment, beyond which the 127.2% Fibonacci extension level at 8.24584 forms a potential upside target as price aims to break above the upper border of the ascending channel.
On the flip side, a rejection at the 100% price extension point at 7.91309, or rejection at the channel’s upper border, targets the 7.83210 support, which intersects the channel’s lower border. A breakdown of the channel extends the decline towards 7.58570.
USDTRY Daily Chart
