USD/TRY stays firmer above 18.00 as Turkish President Erdogan defends CBRT rate cut

• USD/TRY seesaws around the yearly top marked the previous day.
• Turkish President Erdogan mentioned that the country did not need to hike interest rates.
• CBRT announced 100 bps rate cut the last week.
• US PMIs, Durable Goods Orders may entertain traders ahead of Friday’s Jackson Hole speech from Fed’s Powell.

USD/TRY picks up bids to refresh intraday high near 18.10 amid the initial hour of Tuesday’s European session. In doing so, the Turkish lira (TRY) justifies the broad US dollar strength, as well as Turkish President Recep Tayyip Erdogan’s resistance to the rate hike.

“Turkish President Tayyip Erdogan said on Monday the country did not need to hike interest rates, but instead work on raising investment, employment, production and exports and achieving a current account surplus,” reported Reuters.

It’s worth noting that the Central Bank of the Republic of Türkiye (CBRT) surprised markets by announcing 100 basis points (bps) of a rate cut during the last week even as Turkish inflation jumped to the all-time high in July, around 80%.

On the other hand, the US Dollar Index (DXY) rises for the fifth consecutive day as bulls attack the yearly top of 109.29 marked in July. The greenback’s gauge versus the six major currencies seems to cheer the market’s fears of recession, as well as the Fed’s aggression.

While the economic slowdown fears underpinned the yields in refreshing the monthly top the previous day, the US 10-year Treasury yields retreat to 3.0%, down three basis points (bps) at the latest. The pullback in US bond coupons could be linked to the traders’ anxiety ahead of the preliminary S&P Global PMIs from the UK, Eurozone and the US, for August month.

Also important to watch will be the US New Home Sales for July and Richmond Fed Manufacturing Index for August. However, major attention will be given to Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, up for publishing on Friday, for clear directions.

Technical analysis

USD/TRY bulls are well-directed towards refreshing the all-time high marked in late 2021, around 18.35 until the quote stays beyond a five-week-old ascending support line, close to the 18.00 threshold by the press time.