Daily Commentary
 | 13/08/2018

Is Turkey heading for more trouble?

On Sunday, Turkeys President Tayyip Erdogan stated being against a rate hike intended to improve the Liras downfall. Erdogan rejected arguments that Turkey is in a financial crisis and added the currency drop does not reflect the reality and production of Turkey’s economy. It must be noted, the two countries have been disagreeing on various topics from diverging interests in Syria, to Turkey’s desire to buy Russian defence systems, and the case of evangelical pastor Andrew Brunson, who is on trial in Turkey on terrorism charges.Trump on Friday declared the US would double the tariffs on steel and aluminum imports from Turkey, saying dealings with Ankara are not good at the moment. Erdogan urged all Turkish citizens to sell their USD and Euros in order to strengthen TRY.

EUR/USD weakened further since Friday breaking both of our previous support levels (S1) 1.1510 & (S2) 1.1445 which have now turned to resistances. The RSI indicator on the 4H chart is under the reading of 30 which indicates an oversold market which could change direction. If the common currency is undertaken by a bullish sentiment and traders are in for a purchase then we could see the pair aiming for the 1.1445 (R1) resistance level and even break it aiming for the 1.1510 (R2) resistance barrier. On the other hand if the selling interest persists then the pair may break the 1.1375 (S1) support barrier and aim lower for the (S2) 1.1301 support hurdle.

Russia US relationships could worsen even further

Russia will further decline its holdings of U.S. securities as a reaction to new sanctions against Moscow. Russian, Finance Minister Anton Siluanov hinted an unexpected drop in Russia’s holdings of U.S. Treasury bonds. Statistically, Russia’s holdings of Treasury securities dropped 84 percent between March and May, decreasing to $14.9 billion from $96.1 billion in just two months, according to official U.S. reports released July 18. He also stated that Russia will focus on currencies such us Russian Rubble and the Euro, instead of USD. However, he made it clear that US companies that operate in Russia and employ Russian citizens will not be affected as they aim to protect their people’s interests and that these companies pay their taxes accordingly to Russia's budget.

USD/RUB rose even higher during Mondays Opening as its Russian, Finance Minister stated inflation could rise after the recent drops of the Rubble. Technically, the RSI indicator in the 1 hour chart remains above the reading of 70, implying a rather overbought market. If the pair continues to be overtaken by a bullish sentiment we could see it move higher and break the 67.51 (R1) resistance level. On the other hand, Should traders favor USD/RUB short positions, we could see the pair moving lower to the 66.46 (S1) support level and aim for the 65.57 (S2) support barrier. For today no significant economic highlights are to be released however the fundamental news coming from the US, Europe and Asia could affect the market significantly.

EUR/USD

• Support: 1.1375 (S1), 1.1301 (S2), 1.1213 (S3)

• Resistance: 1.1445 (R1), 1.1510 (R2), 1.1580 (R3)

USD/RUB

• Support: 66.46 (S1), 65.57 (S2), 64.76 (S3)

• Resistance: 67.51 (R1), 68.85 (R2), 69.80 (R3)