- USD/TRY looks to retest record highs of 14.64 on Tuesday.
- Lira gives up Turkey’s central bank intervention-led brief rebound.
- Overbought RSI fails to deter the USD/TRY bulls ahead of the Fed.
USD/TRY is rebounding towards the all-time highs of 14.64 during European trading this Tuesday, having corrected sharply to sub-14.00 levels a day before.
The quick retracement in the pair came after the Turkish central bank (CBRT) interveened in the forex market to resuce the lira, by selling the US dollar.
The CBRT played its hands for the third time this month to stem the relentless fall in the local currency.
Expectations of a CBRT rate cut are likely the main reason behind the lira’s turmoil. On Monday, Turkish Finance Minister Nureddin Nebati said the country is determined not to raise interest rates, voicing President Recep Tayyip Erdogan’s bold stance against raising rates.
The only thing that can save the lira from additional declines is a dovish surprise from the Fed on Wednesday, which could knock down the greenback across the board, in turn, weighing heavily on USD/TRY.
Looking at USD/TRY’s technical chart, the bulls have recaptured the 14.00 barrier, in a sharp comeback after closing in the red on Monday, the first time in four trading days.
Bulls are now set to challenge the 14.50 psychological level, above which the record highs will be put to test once again.
The Relative Strength Index (RSI) is inching higher while within the overbought region, suggesting that there is some room to rise for the spot.
USD/TRY: Daily chart
On the flip side, any retracement could test bullish commitment at Monday’s low of 13.61.
The recent range lows of around 13.40 could cap additional corrective declines.
Selling interest will revive below the latter, calling for a retest of the upward-pointing 21-Daily Moving Average (DMA) at 12.76.
