As the US holiday joins a cautious attitude ahead of Turkish inflation, the USD/TRY clings to a record high near 26.00

Despite struggling to make significant gains around 25.93, USD/TRY has broken its three-day downtrend during Tuesday’s European session. The currency pair appears to be taking cues from the broader US Dollar recovery and concerns about decreasing Turkish inflation, all while navigating the subdued markets due to the US holiday.

However, investors should be aware of potential recession risks as the US yield curve inversion continues to cause concerns. The previous day saw the inversion between the US 10-year and two-year Treasury bond yields reach its highest point since 1981, indicating potential economic troubles. Reuters stated, “The yield curve briefly inverted to 42-year lows Monday as investors increasingly expect the Fed to raise its benchmark borrowing rates to keep inflation in check.” As a result, the US two-year Treasury bond yields fell to 4.85%, while the 10-year counterpart dropped to 3.78%. They ended Monday’s trading at around 4.93% and 3.86%, respectively.

Although US Treasury Secretary Janet Yellen attempted to strengthen Sino-American economic connections when she was in Beijing, other news stories have raised questions about the ongoing US-China rivalry. The Biden administration is reportedly seeking to restrict Chinese corporations’ access to US cloud computing services, according to The Wall Street Journal. This may further exacerbate already tense ties between the two economic heavyweights.

Despite sluggish markets, buyers of gold remain unchallenged by downbeat US data and hawkish Fed bets. On Monday, the US ISM Manufacturing PMI for June dropped to its lowest level in three years and remained below 50.0 for the seventh consecutive month. It marked a 46.0 figure, lower than the expected 47.2 and the previous 46.9. In addition, the S&P Global Manufacturing PMI for June confirmed a 46.3 figure, the lowest in five months. However, there was good news as Construction Spending improved by 0.9% MoM for May, beating expectations of 0.5% and the previous readout of 0.4%.

The Central Bank of the Republic of Türkiye (CBRT) recently increased rates to 15%, the first hike since August 2021. Although the rate hike was lower than the anticipated 21%, buyers of the Turkish Lira (TRY) were still disappointed. However, the CBRT remains committed to achieving its 5% inflation target and is open to considering additional monetary tightening measures. Unfortunately, the announcement led to the USD/TRY reaching a record high of 24.61.

Looking ahead, traders of the Turkish Lira pair should pay attention to the Turkish Consumer Price Index (CPI) and Producer Price Index (PPI), set to be released on Wednesday. In addition, the Fed minutes on Wednesday and the US jobs report for June on Friday will also be important factors to consider for short-term directions.

USD/TRY Long (Buy)
Enter At: 26.157402
T.P_1: 26.442529
T.P_2: 27.229926
T.P_3: 28.169430
T.P_4: 28.746865
T.P_5: 29.346584
T.P_6: 29.931014
S.L: 25.202859


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