USD/TRY capped below 7.7550 consolidating at six-week lows

• USD/TRY remains limited below 7.7550 after a 10% sell-off last week.
• Erdogan's plan to introduce a new economic model has boosted the lira.
• The US dollar might have printed a major top at 8.58 – Commerzbank.

The US dollar remains unable to take distance from last-week lows right below 7.6000 and the is moving sideways with bullish attempts capped below 7.7550. The greenback consolidates losses after plunging about 10% last week.

The lira surges on Turkey’s new economic plan

The Turkish lira went through its best weekly performance since 2008 last week. President Erdogan’s promise to introduce a new economic model and the replacement of the whole economic team boosted confi=dence in the TRY.

Erdogan pledged an economic strategy based on financial stability and lower inflation to attract international investment and replaced the Governor of the Central Bank as well as the treasury and finance ministers.

Beyond that, the market has priced-in an interest rate hike by the CBRT, from the current 10.25% to 15%, to be announced after its November 19 meeting. This has contributed to strengthening the lira, which had depreciated about 40% in the year so far.

USD/TRY might have posted a major top at 8.58 – Commerzbank

According to Axel Rudolph, Commerzbank’s Senior FICC Technical Analyst, the USD/TRY might have printed a major top last week: “USD/TRY formed a major top at its recent all-time high at 8.5814 (according to CQG data) before swiftly coming off towards the late September low and the 2020 uptrend line at 7.4945/4618. In this area, the cross is likely to short-term stabilise.”