Today’s recommendation on the lira against the dollar

• Risk 0.50%.
• None of the buy or sell transactions of yesterday were activated

Best selling entry points

Entering a short position with a pending order from levels of 18.33

• Set a stop-loss point to close the lowest support levels at 18.55.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the strong resistance levels at 17.70.

Best buy entry points

Entering a long position with a pending order from 17.98 levels

• The best points for setting stop-loss are closing the highest levels of 17.74.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.

Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the support levels 18.31

Analysis of the Turkish lira

The USD/TRY stabilized against the dollar at its lowest level during the current year, near the highest level for the pair recorded during the past year. This is after the Turkish Central Bank surprised the markets and cut the interest rate last Thursday by 100 basis points or 1 percent. The stimulus policy pursued by the Turkish Central Bank is one of the biggest reasons that put pressure on the price of the lira, which is slowly declining against the dollar. During the day, the Turkish President will meet with the Council of Ministers to study the market’s reaction to the interest rate cut in conjunction with the expansion of inflation. Meanwhile, investors followed up on what could be called tensions at the political level after the United States accused Turkey of helping Russia evade some sanctions. In this regard, US Deputy Treasury Secretary Wali Ademo said on Saturday that Moscow is trying to use Turkey’s willingness to help resolve the crisis in Ukraine to bypass Western sanctions. During the call between the Treasury Secretary and Turkish Deputy Finance Minister Yunus Ilyas, Ankara emphasized that it would not allow Russia to violate the sanctions imposed by Western countries due to its invasion of Ukraine. Political tensions may represent one of the reasons for putting pressure on the price of the lira, which has no hope of rising in light of the current political and economic conditions.

Technical Outlook

The US dollar against the Turkish lira settled at its highest level during 2022, after breaking the narrow trading range in which the pair has settled since the beginning of the month, which is shown on the chart. The pair traded the highest support levels, which are concentrated at 17.98 and 17.85, respectively. While the lira is trading below the resistance levels at 18.16 and 18.33, respectively. The pair is also trading above the 50, 100 and 200 moving averages, on the four-hour time frame as well as on the 60-minute time frame, indicating the long-term bullish trend. The chance of the lira rising against the dollar is still slim as the pair is heading in an overall bullish trend. As each decline of the pair represents a good buying opportunity, please adhere to the numbers in the recommendation, with the need to maintain capital management.

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The pair will likely keep falling ahead of the RBI decision.

Bearish View

• Sell the USD/INR and set a take-profit at 78.50.
• Add a stop-loss at 79.50.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 79.35 and a take-profit at 80.
• Add a stop-loss at 78.50.

The USD/INR price dropped to the lowest level since July 11th as investors waited for the upcoming interest rate decision by the Reserve Bank of India (RBI). It fell to a low of 78.90, which was significantly below the year-to-date high of 80.18.

RBI Decision Ahead

The Indian rupee has done well in the past few days as the strength of the US dollar fades. The currency has jumped by 1.42% from the lowest level this year. The focus among market participants is on the upcoming interest rate decision by the RBI that is scheduled for Thursday this week.

Economists expect that the RBI will continue with its hawkish moves as it continues its battle against inflation. Precisely, they believe that the bank will hike the repo rate by between 35 and 50 basis points. Those at Bank of America expect the RBI to hike by 0.35% while those at Housing.com see the bank raising by 0.25%.

Unlike other major central banks, the RBI is not under intense pressure since inflation is moving in the right direction. The headline inflation dropped to 7.01% in June, meaning that the bank will likely lower its inflation target for the year.

Besides, there are signs that commodity prices are falling, which is a good sign for inflation. For example, the price of crude oil is substantially lower than where it was earlier this year.  Similarly, the cost of key commodities like iron ore, copper, and aluminum has dropped in the past few weeks.

Last week, the Federal Reserve decided to hike interest rates by 0.75%, bringing the total YTD increases to 225 basis points. The RBI has raised by just 90 basis points since inflation pressures are not as significant.

USD/INR Forecast

The four-hour chart shows that the USD/INR price soared to a high of 80.23 in June this year. Since then, the pair has been moving sideways as investors worry about whether the recovery has any more room left. It has dropped below the 25-day and 50-day moving averages while the MACD has moved below the neutral point.

The Relative Strength Index (RSI) has been moving downwards. Therefore, the pair will likely keep falling ahead of the RBI decision. The next key support level to watch will be at 78.50.

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There is a likelihood that the pair will resume the bearish trend as bears target the key psychological level at 0.6750.

Bearish View

• Set a sell-stop at 0.6800 and a take-profit at 0.6700.
• Add a stop-loss at 0.6800.
• Timeline: 1-2 days.

Bullish View

Set a buy-stop at 0.6850 and a take-profit at 0.6900.

Add a stop-loss at 0.6800.

The AUD/USD price is holding steady after last week’s crash. The pair is trading at 0.6815, which is significantly higher than last week’s low of 0.6767. This price is about 6.46% below the highest point in June this year.

RBA Decision Ahead

The Australian dollar has been in a strong bearish trend in the past few weeks even after the Reserve Bank of Australia (RBA) turned extremely hawkish. In June, the bank caught many investors by surprise as it decided to hike interest rates by 0.50%. This was the biggest rate hike by the bank in decades.

The next key catalyst for the AUD/USD will be the upcoming interest rate decision that is scheduled for Tuesday. Analysts expect that the bank will intensify its battle against inflation by hiking interest rates by 0.50%. Most importantly, they believe that the bank will signal that it will deliver a similar hike in August.

These rate hikes have had an impact on the Australian economy. For example, the cost of government borrowing has risen substantially, with the yield of the 10-year rising to 3.47%. Similarly, consumers are paying more money for mortgages.

Banks like CBA, NAB, and Westpac have hiked the cost of fixed mortgages. According to RateCity, over 70 lenders have boosted their rates. This is affecting the economy, with data published on Monday showing that building approvals dropped sharply in May.

In a recent statement, RBA’s Philip Lowe warned that the country’s inflation will keep rising in the coming months. The bank expects that inflation will rise to 7% by end of this year. This is a significantly higher level considering that the bank has an inflation target of 2.0%.

The AUD/USD pair will also experience some low volume on Monday since American markets will be closed for the Independence Day celebration.

AUD/USD Forecast

The four-hour chart shows that the AUD/USD pair formed a symmetrical triangle pattern last month. It then managed to have a bearish breakout last Friday as the dollar strength continued. It fell to a low of 0.6762, which was the lowest level this year.

The pair has now pulled back as investors buy the dips. It remains below the 25-day and 50-day moving averages and the lower side of the triangle pattern.

Therefore, despite the pullback, there is a likelihood that the pair will resume the bearish trend as bears target the key psychological level at 0.6750.

The pair will likely resume the bearish trend and retest this week’s low at 1.1938. 

Bearish View

• Sell the GBP/USD pair and set a take-profit at 1.1938.
• Add a stop-loss at 1.2250.
• Timeline: 1 day.

Bullish View

• Set a buy-stop at 1.2240 and a take-profit at 1.2300.
• Add a stop-loss at 1.2125

The GBP/USD pair drifted upwards after the hawkish Fed decision. Focus now shifts to today’s meeting by the Bank of England (BOE). It is trading at 1.2163, which is slightly above the lowest level this week.

BOE Decision Up Next

The Fed delivered a hawkish interest rate decision on Wednesday. After concluding the two-day meeting, the bank decided to hike rates by 0.75%, the highest increase since 1994. And in a press conference, Jerome Powell warned that the bank could hike rates by another 0.75% in its upcoming meeting.

The current pace of rate hikes provide more clarity about what Powell warned in May. In a speech, he warned that the current policy would lead to pain in the market. Since then, stocks, cryptocurrencies, and bonds have all slumped.

Still, amid the hawkish talk, there are concerns that the bank could be moving too fast. A notable fact is that Esther George, one of the most hawkish FOMC members, did not vote for a 75 basis point hike. Instead, she supported a 0.50% increase.

The next key catalyst for the GBP/USD pair will be the interest rate decision by the BOE. Analysts expect that the BOE will also hike interest rates by 0.25% for the fifth consecutive time. The bank is tightening its policy in a bid to fight the soaring inflation.

Still, the biggest concern is that data points to more weakness of the UK economy. The economy contracted for the second straight month in April. Key leading indicators like manufacturing and industrial production also declined.

Further, data published on Tuesday showed that the country’s unemployment rate rose in April. Therefore, more tightening could have an impact on the economy. Besides, the UK is expected to have the second-worst recovery in the G20 after Russia.

GBP/USD Forecast

The GBP/USD pair pulled back after the hawkish Fed decision. It rose and retested the important resistance level at 1.2163, which was the lower side of the inverted cup and handle pattern. In price action analysis, a break and retest is usually a sign of a continuation.

The pair is still below the 25-day and 50-day moving averages while the Relative Strength Index has moved slightly above the oversold level.

The pair will likely resume the bearish trend and retest this week’s low at 1.1938. A move above the 25-day MA will invalidate the bearish view.

Today’s recommendation on the lira against the dollar

Risk 0.50%.

None of the buy or sell trades of the recommendation were activated yesterday

Best selling entry points

• Entering a short position with a pending order from 16.40 levels
• Set a stop loss point to close the lowest support levels 16.66.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the strong resistance levels at 16.00.

Best entry points buy

• Entering a long position with a pending order from 15.99 levels
• The best points for setting stop-loss are closing the highest levels of 15.78.
• Move the stop loss to the entry area and continue to profit as the price moves by 50 pips.
• Close half of the contracts with a profit equal to 55 pips and leave the rest of the contracts until the support levels 16.60

The Turkish lira continued its losses to become the worst performing currency during the current year. Investors are awaiting the Turkish Central Bank’s decision on interest rates today. No changes are expected to the monetary policy of the bank, which is under the effective control of Turkish President Recep Tayyip Erdogan. The bank has fixed the interest rate since last September, following a series of interest rate cuts that continued over several months. The Turkish Central Bank is going against the assumption of raising the interest rate to control the high inflation rate. During bad economic data that the country is suffering from, the lira is not expected to witness any improvement against the dollar, especially with the decline in the actual monetary reserves of foreign currencies owned by the Central Bank of Turkey.

On the technical front, the Turkish lira fell slightly against the dollar during today’s trading, as the lira reached the main resistance levels recorded at the end of last year’s trading. The pair also rose above the moving averages 50, 100 and 200, respectively, on the four-hour time frame as well as on the 60-minute time frame. The pair is trading the highest support levels that are concentrated at 16.00 and 15.85 levels, respectively. On the other hand, the lira is trading below the resistance levels at 17.11 and 18.39. We expect the lira to continue to decline, especially if the pair closed above the 16.40 resistance levels. Please adhere to the numbers in the recommendation with the need to maintain capital management.

The pair will likely keep falling ahead of the RBA decision as bears target the support at 0.7000.

Bearish View

• Sell the AUD/USD and a take-profit at 0.7200.
• Add a stop-loss at 0.7140.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 0.7100 and a take-profit at 0.7200.
• Add a stop-loss at 0.7035.

The AUD/USD pair’s downward trend continued on Monday morning as investors repositioned for the upcoming interest rate decisions by the Reserve Bank of Australia (RBA) and the Federal Reserve. The pair is trading at 0.7060, which is close to its lowest level last week. It has collapsed by almost 8% from the highest point in April.

Action-Packed Week

The AUD/USD pair will have a busy week as the Fed and the RBA publish their interest rate decision. The RBA is expected to sound a bit hawkish when it completes its meeting on Tuesday. The bank will likely leave its interest rate unchanged and then hint that it will deliver its first interest rate hike in June.

The decision will come a few days after the Australian Bureau of Statistics (ABS) showed that the country’s consumer inflation jumped. The headline CPI rose by 5.1% in Q1, which was the highest level in 20 years. It was also significantly higher than the RBA target of 2.0%.

On Wednesday, the ABS will publish the preliminary consumer inflation data. Analysts believe that the country’s sales declined by 0.5% in March as prices jumped. Retail sales are so important because they provide guidance of consumer spending.

The Fed, on the other hand, will complete its monetary policy meeting on Wednesday. Economists expect that the Fed will deliver a more hawkish interest rate hike. Going by the recent statements by Fed officials, the rate hike will be 0.50%. Most importantly, the bank will likely start its quantitative tightening (QT) policy by reducing its balance sheet by $75 billion per month.

The AUD/USD will also react to the latest non-farm payrolls (NFP) data that will come out on Friday. Economists expect that the economy added 361k jobs in April while the unemployment rate fell to 3.5%.

AUD/USD Forecast

The AUD/USD pair has been in a strong bearish trend in the past few days. Along the way, the pair has formed a descending channel pattern that is shown in orange. It is now slightly above the lower side of the channel. At the same time, the pair has moved slightly below the 25-day moving average while the Stochastic Oscillator and the Relative Strength Index (RSI) have pointed downwards.

Therefore, the pair will likely keep falling ahead of the RBA decision as bears target the support at 0.7000. It will then likely retest the upper side of the channel towards or after the RBA decision.

The outlook of the pair is neutral at this stage. 

Bearish View

• Sell the AUD/USD and set a take-profit at 0.7445.
• Add a stop-loss at 0.7540.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 0.7520 and a take-profit at 0.7600.
• Add a stop-loss at 0.7450.

The AUD/USD pair moved sideways on Monday morning as investors refocused on the upcoming interest rate decision by the Reserve Bank of Australia (RBA). The pair is trading at 0.7500, where it has been in the past few days. This price is about 7.7% above the year-to-date low.

RBA Decision Next

The Australian dollar has done well in the past few months, helped by the dramatic increas in commodity prices. Most commodity prices that Australia exports like natural gas, coal, and copper have all increased as the crisis escalates.

The currency has also done well as investors price in a more aggressive RBA. In the past meetings, the RBA has said that it will continue leaving interest rates unchanged at 0.10% until real inflation moves to between 2% to 3%.

Therefore, analysts expect that the bank will follow the steps of other major central banks that have also started to hike interest rates. The Bank of England (BOE) has made three rate hikes while the Fed has made its first 0.25% hike.

And many Fed officials are now supportive of more hikes even as signs of recession rose. Last week, the yield curve inverted for the first time in years. In a statement during the weekend, Mary Daly of San Francisco Fed said that she was supportive of a 0.50% rate hike in May.

Therefore, the next major catalyst of the AUD/USD will be the upcoming RBA decision that comes on Tuesday. There is a likelihood that the bank will change its tone during the meeting.

The pair was also unchanged after the latest Australian retail sales numbers. According to the Australian Bureau of Statistics (ABS), retail sales held steady in February even as inflation kept rising.

AUD/USD Forecast

The AUD/USD pair has been in a strong bullish trend in the past few months. Recently, however, this price action has faded and the pair has been in a tight range. As a result, the price is along the 25-day moving average and the middle line of the Donchian Channels. The Relative Strength Index (RSI) has moved to the neutral level.

Therefore, the outlook of the pair is neutral at this stage. However, there is a likelihood that it will have a minor bearish breakout and retest the support at 0.7442. On the flip side, a move above the support at 0.7537 will mean that there are more buyers.