USDTRY – Extended consolidation likely before renewed strength as negative fundamentals weigh on the lira

The Turkish lira performed slightly better against the US dollar in May but remains within a broader range above its new record low.

USDTRY remains in a prolonged sideways trend, with the risk of a fresh rise persisting due to negative fundamentals weighing on Turkey’s currency. Daily technical studies indicate potential for further upside.

The momentum indicator is moving into positive territory, and the RSI has risen above the neutral zone. However, a stronger bullish signal is still needed as the price remains within a rising daily cloud and the moving averages present a mixed setup.

A sustained break above the daily cloud top at 32.400, which is also the 50% retracement of the 32.836/31.966 pullback, is necessary to strengthen the near-term structure and shift the focus to the upside.

Although a slightly improved economic situation in the country has provided some support for the lira, high interest rates and a sharp rise in the trade deficit threaten to offset these initial positive signals and darken the lira’s short-term outlook.

Res: 32.40; 32.50; 32.63; 32.83
Sup: 32.28; 32.18; 31.96; 31.03