Turkish lira has been in freefall for several months. Bearish momentum on TRY market intensified this week as it became evident that Erdogan will not back down and plans to stick to his unorthodox monetary policy view. What's even more worrying is that there is no evidence CBRT plans to stand up to pressure from the Turkish president. USDTRY gained around 40% in November while EURTRY rallied around 37% during the period. Erdogan said yesterday that lowering interest rates will boost growth, investments and halt inflation, sending TRY to fresh record lows. A slight pullback on USDTRY can be spotted today after CBRT intervened on the FX market to halt lira's collapse. Nevertheless, any such measures are likely to have only a temporary effect without change of course of the monetary policy.
USDTRY reached a fresh all-time highs slightly below 14.00 mark yesterday after comments from Erdogan. Yesterday' highs were tested again today but bulls failed to break above. A double top was painted in the 13.87 area. Neckline of the pattern can be found at 13.075. Realizing the pattern in textbook manner would push the pair back to 12.28. However, it should be noted that risks are skewed to the downside for Turkish lira as lowering interest rates at time of 20~% inflation risks hyperinflation.
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Source: xStation5
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