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Trade of the day – USDTRY

Summary:

  • USDTRY is in the price consolidation from the beginning of December
  • There is no pressure to raise interest rates in Turkey due to slightly lower inflation
  • Erdogan continues to make controversial decisions

Trade: Buy stop at 5.2850

Stop loss: 5.1000

Take profit: 5.6000

Justification:

After a huge interest rate increase which caused a significant strengthening of Turkish Lira, we have moved to a calm period. USDTRY is in a quite wide price consolidation and we cannot see a possible further increase of Lira in near term. On the other hand, history has taught us, that the Turkish currency can be volatile. Currently there are two topics in Turkish news stream. One is that Erdgona, Turkish president renews call for fill investigation into killing of journalist from Saudi Arabia in consoulate in Istabul. Another one is maintaining contact with Syrian government. We see an opportunity of price spike due to escalation of some geopolitical problem.  

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