• USD/TRY posts slight losses around all-time highs as traders await the CBRT rate decision.
• Feeling at risk the new one is also testing buyers ahead of the main event.
• Higher yields and the divergence between the Fed and the CBRT could keep buyers optimistic.

USD/TRY bulls are resting around all-time highs, rallying as high as 18.60 ahead of Thursday’s European session. As such, the Turkiye Lira (TRY) pair depicts typical pre-event anxiety as traders await the rate decision from the Central Bank of the Republic of Türkiye (CBRT).

In addition to caution before the event, the feeling at risk the latter is also weighing on USD/TRY prices amid a slow session. The debate in China over reducing quarantine time for international travelers appears to be reversing earlier risk aversion.

It should be noted that the number inflation which is generally stronger than Englishthe Eurozone and Canada, along with the Fed’s hawkish bets and Fed Beige Book pessimism, appear to have pushed USD/TRY prices higher earlier.

Ahead of the CBRT decision, Reuters said Turkey’s central bank is expected to cut its key rate by 100 basis points to 11% next week, according to a Reuters poll released on Friday, after President Tayyip Erdogan called for a further easing each month and said interest rates must be in the single digits by the end of the year. The survey news also said, “The central bank has surprised markets twice in the past two months by lowering its policy rate by 100 basis points each time, bringing it down to 12%, despite inflation which exceeded 83% in September.

Therefore, cut interest rate CBRT is likely to stop USD/TRY gains near all-time highs, but gains are still possible amid inflation fears and high yields. US 10-year Treasury yields are back to 14-year highs above 4.0%, around 4.15% at press time, while two-year yields remain strong, near their highest level since 2007, up 0.30% intraday close to 4.57%.

Consequently, each retreat decisions surrounding CBRT can be difficult unless there is a major shock.

Technical analysis

USD/TRY remains on buyers’ radar even though 18.60 appears to be the closest hurdle to cross daily towards the 19.00 reference level. Meanwhile, the previous weekly low around 6:45 p.m. appears as key short-term support.