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It fell on Monday, leading to a decline in major emerging market currencies as investors sold their assets worried about global economic growth prospects.
The lira fell 1.4% to 5.57 pounds per dollar. The lira has withstood the trend of emerging markets in recent weeks, reaching its highest level in four months.
The recent rise in the lira comes after a slight improvement in economic statistics, especially inflation, which began to fall. Erdogan's "demand-driven" finances, which have begun to interfere in Central Bank policy since the dismissal of Murat Uysal's governor in early July.
The lira was one of the lucky beneficiaries of the US Federal Reserve's move to a more cautious stance, which boosted emerging markets, especially relatively cheap Turkish assets.
The escalation of the trade war between the United States and China and the devaluation of the yuan in Beijing would prompt the Federal Reserve to do more to weaken the dollar, giving more leeway to read it.
Investors and Turkish officials preparing for the worst this summer were also surprised by the reluctance of US President Donald Trump to punish NATO's ally Ankara for accepting the delivery of Russian defenses. 400 last month.
These devices have unexpectedly covered the Turkish lira as the largest economy in the Middle East is emerging from the recession.
The Turkish lira is the strongest currency in emerging markets so far this quarter, with bond yields some of the worst this year.
What could the gains of the Turkish lira threaten?
US lawmakers remain unhappy with the purchase of S-400 from Ankara and may move to their return to Washington next month. At the same time, the conflict over water exploration off Cyprus could lead to sanctions on the part of the EU.
The most important events that could move the read this week
No significant economic report will come out of Turkey this week, with the Turks being occupied by the holiday of Eid al-Adha until Wednesday.
On the dollar side, any weakness in the US CPI could put pressure on the greenback and give the Turkish lira a chance to recover. This report will be released Tuesday at 15:30 KSA.
Technical Outlook for USDJPY
The Turkish lira rose last week against the US dollar, according to our analysis on Tuesday, while the USDTRY hit 5.44 lira per dollar on Thursday, its lowest level since April.
At the time of writing this article, the USDTRY is trading at 5.55 lira and we expect the pair to face resistance at 5.58.
In general, however, we find that any rally will likely offer a sales opportunity as long as we do not see a daily close above 5.62.
While the support level is at 5.48 lira, any break with a daily close will pave the way for a fall in the dollar against the lira to 5.40 lira. Bayanat.net website
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