USD/TRY recedes from fresh all-time high near 9.3700

• USD/TRY clinches new all-time peak around 9.3700.
• The lira remains under heavy pressure ahead of the CBRT.
• Investors see the CBRT cutting rates on Thursday.

Another day, another all-time high in USD/TRY. This time, the pair advanced to the 9.3700 area after losing some upside traction.

USD/TRY keeps looking to the CBRT

Curiously, the lira now manages to regain some composure and forces USD/TRY to abandon the area of recent all-time highs near 9.3700 and head lower towards the 9.3200 zone on Tuesday.

The selloff in the greenback in combination with extreme overbought levels of the pair might have combined to spark the ongoing knee-jerk in spot, although it should be considered temporary, as the risk for TRY remains tilted well to the downside for the time being.

Indeed, the broad consensus among investors expects the Turkish central bank (CBRT) to reduce further (100 bps?) the One-Week Repo Rate at its event on Thursday. It is worth recalling that the depreciation in the lira gathered unusual pace after President Erdogan removed three CBRT officials earlier in the month, undermining further the credibility around the monetary authority (if there still was some left).

However, prospects for a reduction of the policy rate have been growing since CBRT Governor S.Kavcioglu announced some weeks ago that the core inflation rate will now be used to set the level of the key interest rate. So, all in all, the September’s interest rate cut should not have surprised anybody…

USD/TRY key levels

So far, the pair is losing 0.13% at 9.3163 and a drop below 9.0873 (10-day SMA) would aim for 8.9588 (20-day SMA) and finally 8.8317 (monthly low Oct.4). On the other hand, the next up barrier lines up at 9.3699 (all-time high Oct.19) followed by 10.0000 (round level).