The recent history for the Lira says that in January of 2005, after a devastating fell of the currency a new version of the Turkish Lira was issued.
Lira's value fell so dramatically that the conversion was $1 to 1.5 million TRY.
As the Turkish economy mostly relies on quick short term profits on higher interest rates that make the currency very sensitive on any global economy headwinds and the subsequent risk off environment may lead to massive depreciations of the Lira.
Although the nation wishes Turkey to join the Euro Zone, political conditions in Turkey and economic issues in the EU continue to delay the process.
After the rating agencies reveled on Tuesday the possibility that Turkish President Tayyip Erdogan will pull back the levers and tighten more the monetary policy the Turkish lira tumbled again to a fist time low of about 4.8449 per USD in early Asian trade on Wednesday according to investing.com.
After the aggressive political decision of Turkish President and the uncertainty that governs the country we can clearly see that the aftermath of those decisions may possibly further depreciate the Turkish Lira.
Although the Turkish economy might not be in a favor of the home currency, traders and investors may take the opportunity to further hit the lira with a tsunami of sell off and creating a further depreciation of the currency.
Now regards to the other side of the pair based on SINGAPORE (Reuters)
The US Dollar was higher against the basket of currencies yesterday (Wednesday).
Investors were eager for the Federal Reserve's last policy meeting to see if they can gather some clues on the pace of further U.S. monetary tightening.
According to investing.com the dollar index (DXY), which measures the currency against a basket of six major peers, rose 0.1 percent to 93.681. On Monday, the index set a five-month high of 94.058.
The US Dollar gain more than 4% from the last month and that was the result of the U.S. economic data and expectations that the Fed probably may raise interest rates at least two more times this year.
USTRY Daily Chart
Based on the crossing of the 2 EMAs here 36 and 12 we can see that the price heads upward..
Any actions for potential bullish signals might be taken into consideration in case the price reverses to the first EMA (12) which will be approximately in the same level as the Fibonacci 38%
Marios Athinodorou is TeleTrade’s market analyst and commentator. Apart from being an experienced trader, Marios is an advanced technical analyst and is interested in trading psychology. He has 7 years of trading expertise in Forex and CFDs, providing insights to share with all kinds of traders, from beginners to experts. Among others, Marios is delivering weekly trading webinars. Sign up for upcoming webinars, here.
Disclaimer: Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and education purposes. Personal Opinion of the Author does not represent and should not be construed as a statement or an investment advice made by TeleTrade. All Indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
Risk Warning: Investment services are provided by TeleTrade-DJ International Consulting Ltd, a Cyprus Investment Firm under reg. number HE272810 operating in accordance with MiFID, under license 158/11 by the Cyprus Securities and Exchange Commission. Trading in leveraged derivative financial instruments carries a high level of risk and may not be suitable for all investors. Past performance is not a reliable indicator of future results. Indiscriminate reliance on informational or historical materials may lead to losses.