Published On: Wed, Mar 15th, 2017

USD/TRY: waiting for FOMC decisions


Current trend

This week, the pair stabilized after two-week growth and now is trading within the range of 3.7620-3.7150. Today, traders are waiting for FOMC’s decision on interest rate. Nobody doubts that the interest rate hike will happen, so traders are interested in the next steps of the regulator. Is FOMC going to tighten monetary policy, or will it make a pause? How much hikes are they gone to make — three or less? Investors will try to get this information from Janet Yellen’s commentary on FOMC’s decision. February data on Consumer Price Index are also due today, and they can influence the said decision in case they are weak, but almost nobody believes in it.

In general, the pair is trading within the side range, and TRY is even strengthening there. But this tendency is most likely temporal (Stochastic is approaching oversold zone, which can lead to reversal). In mid-term, Turkish currency will be under pressure of Turkey/Netherlands conflict, which is gradually turning to Turkey against EU. In response to EU members supporting government of Netherlands, Turkey EU Minister Omer Celik stated that the migration agreement concluded in March 2016 is now over.  Further conflict escalation can weaken TRY even more.

Support and resistance

Technically, key positions are range borders 3.7150 and 3.7620. If the market reacts positively to FOMC’s decision, the price might grow to 3.8300, 3.8760 and even annual maxima of 3.9415. Price might be corrected to 3.6570 (23.6% Fibonacci correction) and 3.5660 (February minimum). Technical indicators give unclear signals: Bollinger Bands are narrowing as if a major price peak is ahead, Stochastic is pointing downwards, but is near the oversold zone, MACD histogram is approaching negative zone and forming a sold signal.

Support levels: 3.7200, 3.6570, 3.5660, 3.5220.

Resistance levels: 3.7620, 3.8300, 3.8760.

Trading tips

In this situation, long positions can be opened above  3.7620 with take-profits at 3.8300, 3.8760 and Stop loss order at 3.7400. Short position might become relevant of the price consolidates below 3.7200 with targets at 3.6570, 3.5660 and stop-loss at 3.7300.

Forex Analysis

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