USD/TRY bulls push boundaries past 27.00 with eyes on CBRT Interest Rate Decision, Jackson Hole

• USD/TRY renews the all-time high despite softer US Dollar.
• CBRT’s struggle to tame inflation joins challenges to Fed policy pivot concerns to weigh on Turkish Lira.
• Multi-year high yields, China-inflicted risk-off mood also underpin USD/TRY advances.
• Second-tier catalysts may entertain intraday, CBRT rate hike, Fed Chair Powell’s speech at Jackson Hole eyed.

USD/TRY rises to the fresh record top around 27.20 as market players prepare for the Central Bank of the Republic of Türkiye (CBRT) Interest Rate Decision and the Fed Chair Jerome Powell’s speech at the Kansas Fed’s annual event called the Jackson Hole Symposium.

In doing so, the Turkish Lira (TRY) pair justifies the market’s lack of confidence in the CBRT, despite repeated rate alterations to tame the inflation woes. It’s worth noting that the Turkish central bank has fuelled benchmark rates by 900 basis points since May 2023, to 17.5% at the latest.

On the other hand, US Dollar Index (DXY) renews its intraday low near 103.10, down for the second consecutive day, even as the US Treasury bond yields refresh the multi-year high. That said, the US 10-year Treasury bond yields refreshed the highest level since November 2007 earlier in the day to 4.36% before easing to 4.34% at the latest.

It’s worth noting that the market’s risk-off mood and fears of Fed Chair Jerome Powell’s defense of the hawkish monetary policy in Friday’s showdown seem to propel the USD/TRY price. Behind the consensus are the mostly upbeat US data and looming fears about the US banking industry, especially after the recent credit rating downgrade from Moody’s and S&P Global. Also likely to have contributed toward souring the sentiment is the concern that China’s efforts to defend the post-COVID economic recovery, via a slew of stimulus measures, won’t be enough for Yuan and the Dragon Nation.

Against this backdrop, stock futures from the US and Europe print mild losses whereas the riskier assets hold despite the US Dollar’s retreat.

Looking forward, Tuesday’s US housing numbers and Fed talks will precede Wednesday’s Turkish Consumer Confidence and US PMIs to provide fresh impetus to the USD/TRY pair. However, major attention will be given to Thursday’s CBRT Interest Rate Decision and Friday’s Fed Chair Powell’s speech at the Jackson Hole for clear directions.

Technical analysis

USD/TRY bulls occupy the driver’s seat unless the Turkish Lira (TRY) provides a daily closing beneath a five-week-old rising support line, close the 27.00 threshold by the press time.