FxWirePro: Lira bears aiming for 7.5 per USD

While the dollar has weakened against its major trading partners (dollar index down 2.2 percent from peak to 94.6 as of today), it has strengthened against many of its emerging market currencies, such as the Turkish Lira.

After strengthening to as low as 5.69 per USD two weeks before, the Turkish Lira has once again resumed its rapid decline against the dollar. As of today, Lira is trading at 6.77 per USD, and our calculations suggest the Lira bears are aiming for 7.5 per USD as the next target.

However, there is also a bullish force stemming from the dollar’s weakness against its major trading pairs. But as of now, that force isn’t strong enough when it comes to Lira. Without a major fundamental change such as Turkey’s deal with the United States, or broad-based dollar selloffs due to geopolitical event such Europe opening up payment channels bypassing the USD, we don’t see the Lira bulls getting an upper hand. The calculation also suggested the Lira Bulls are targeting a correction towards 4.9 per USD area.