USD/TRY struggles near record top below 19.00 as CBRT rate cut looms

• USD/TRY prints mild losses around all-time high as traders await CBRT Interest Rate Decision.
• Fresh risk-on mood also probes bulls ahead of the key event.
• Firmer yields, Fed vs. CBRT divergence can keep buyers hopeful.

USD/TRY bulls take a breather around the all-time high, taking rounds to 18.60 heading into Thursday’s European session. In doing so, the Turkish lira (TRY) pair portrays the typical pre-event anxiety as the pair traders await the Central Bank of the Republic of Türkiye (CBRT) interest rate decision.

In addition to the pre-event caution, the latest risk-on mood also weighs on the USD/TRY prices amid a sluggish session. China’s debate on reducing quarantine time for international travelers seemed to reverse the previous risk aversion.

It’s worth noting that the broadly firmer inflation numbers from Britain, Eurozone and Canada, as well as the hawkish Fed bets and pessimism conveyed by the Fed’s Beige Book, seemed to have propelled USD/TRY prices previously.

Ahead of the CBRT Interest Rate decision, Reuters mentions that Turkiye's central bank is expected to cut its policy rate by 100 basis points to 11% next week, a Reuters poll showed on Friday, after President Tayyip Erdogan called for more easing each month and said rates should be single digits by year-end. The survey update also states, “The central bank has shocked the markets twice in the past two months by cutting its policy rate by 100 basis points each time, lowering it to 12%, despite inflation soaring above 83% in September.”

Hence, the CBRT rate cut is likely to stop the USD/TRY bulls near the all-time high but the bulls aren’t off the table amid inflation woes. and strong yields. That said, US 10-year Treasury yields refreshed a 14-year high above 4.0%, around 4.15% by the press time while its two-year counterpart stays strong near the highest level since 2007, up 0.30% intraday near 4.57% at the latest.

As a result, any pullback around the CBRT decision could be elusive unless hearing major surprises.

Technical analysis

USD/TRY remains on the bull’s radar even as 18.60 appears immediate hurdle to cross on the daily basis to aim for the 19.00 threshold. Meanwhile, the previous weekly low of around 18.45 appears short-term key support.