USD/TRY Price Analysis: Bears buy TRY, supported on worsening opinion polls for Erdogan

• USD/TRY bears are stepping in at a critical level of resistance on the daily chart. 
• TRY could find further stability as we approach planned elections scheduled for no later than mid-2023. 

The price has hit a crossroads according to the technical structure of the market and recent price action. The following illustrates this from a daily perspective taking into consideration the prior volumes of transactions conducted just below 14 the figure and the confluence of the 38.2% Fibonacci retracement level as follows:

USD/TRY Daily chart

As illustrated in the above chart, the price has made a classic bearish impulse followed by a decelerating correction into a key zone of resistance. The price action has been driven by central banking fundamentals and uncertainties in that regard persist due to the unprecedented course of action by Turkish officials combatting the highest levels of inflation since 2002, (Turkey's consumer price inflation jumped to 36.08 per cent year-on-year in December 2021, up from 21.31 per cent in the previous month). 

Most central banks raise interest rates to help cool inflation but Turkey has gone the other way. In a speech on Monday, he said Turkey was "going through a transformation in economy and rising to the next league". 

Given that Tayyip Erdogan prioritises exports over currency stability, there is going to be more volatility and inflation risks ahead as the central bank is unlikely to act. Mr Erdogan overhauled the central bank's leadership last year. The bank has already slashed rates to 14 per cent from 19 per cent since September despite the central bank's official inflation target being just 5 per cent. 

The further Erdogan digs a hole for himself, the lira could find further stability as we approach planned elections scheduled for no later than mid-2023. The economic turmoil has already started to hit President Erdogan's opinion poll ratings as Erdogan's scheme to curb the lira's weakness has been seen to fail.