Giuseppe Bocci, CTA
Independent Analyst
Just a few sessions after reaching an all-time high on Thursday the 18th, the EUR/TRY pair began a pullback, leading to a retest of the 35.60 level. This level corresponds to the resistance of the consolidation channel in which the pair was trapped for the past four months and now acts as a support.
Yesterday the rate reacted with notable strength, surging again and forming a long-bodied bullish candle with an upper shadow on the daily chart, suggesting a price rejection and a clear directional bias, with price action pushing upward.
Assuming the 35.60 support level holds, it is still too early to tell whether EUR/TRY will resume its upward trend or enter a higher trading range. The key movement to watch will be the breakout of the pivot line at 36.30, which now represents a new resistance.
It is worth noting that the pair is currently moving close to the upper boundary of a steep long-term upward trend, which does not show any clear signs of fatigue, even though the momentum indicator displays a clear divergence in both the daily and weekly charts.
The upcoming days present a rich macroeconomic agenda that can provide new clues on the pair's direction. The next Turkish inflation reading, due on August 5th, could affect the market, especially if it diverges from the projected reduction path.
On the other side, today's much-anticipated US PCE index will be released, followed on July 31st by the preliminary EU CPI. These announcements weigh on the USD/EUR exchange rate, whose movements can indirectly influence EUR/TRY as well.
Finally, to gain a broader understanding of the rate dynamics (and associated risks), it is crucial to always consider the Turkish macroeconomic scenario as well as its financial and political situation.
Daily chart
Weekly chart
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