CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

USDTRY TRYing and Failing to Form a Government

Article By: ,  Financial Analyst

We rarely check in on the Turkish Lira beyond our weekly Emerging Market FX Rundown, but today’s moves in USDTRY practically mandate a closer look. Back in June, the incumbent Justice and Development Party (AKP), ostensibly led by Turkish Prime Minister Ahmet Davutoglu but widely-known as the party of co-founder and current President Recep Tayyip Erdoğan, lost its overall majority for the first time since ascending to power back in 2002. In essence, voters rejected Erdoğan’s plan to make himself an executive president with minimal checks and balances on his power, leading to prolonged coalition negotiations between AKP leaders and the Republican People’s Party (CHP).

Earlier today, those talks collapsed, opening the door for snap elections in the next few months. In his predictably political press conference afterwards, Prime Minister Davutoglu stated, “We have not been successful in assuring a favorable base for the creation of a government” and that “snap elections have become the only option for Turkey.”

As is often the case with political uncertainty, traders chose to shoot (the lira) first and ask questions later, driving USDTRY up to a new all-time high above 2.80. With ongoing political uncertainty to reign for the next few weeks or months, to say nothing of the joint US-Turkey military strikes against Syria, the fundamentals seem to strongly favor more upside in USDTRY.

On a technical basis, the next level of resistance to watch will be the confluence of Fibonacci extensions levels at 2.8550-80, followed by the extreme 161.8% level up at 2.92. This extended level also represents the measured move objective of the recent bullish flag pattern, so a rally to that level cannot be ruled out, especially with the MACD showing strong and growing bullish momentum. To the downside, the 2.75 level may provide support on any short-term dips.

Source: City Index

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024