Soaring inflation keeps lira under pressure; CBRT policy meeting in focus

Turkish lira hit session low at 6.7339 in early Monday’s trading as release of CPI data showed Turkish inflation rose further in August and hit the highest in 15 years at 17.9%, overshooting forecast at 15.85%.
Lira managed to recover part of post-data losses on subsequent bounce to 6.60, but remains under strong pressure on surging inflation and concerns about the action of the CBRT which meets on 13 Sep.
The central bank needs to make significant rate hike in order to tackle soaring inflation and stabilize the national currency.
Otherwise, the lira may fall to Fibo projection at 7.4425 and psychological 7.50 level, if the central bank fails to act accordingly.
Technical studies remain supportive, as weeklies maintain strong momentum and previous week’s strong bullish close completed reversal pattern of 7.1043/5.6875 pullback, while fresh bullish momentum is building on daily chart.
However, reversal of daily slow stochastic / RSI from overbought territory suggest the USDTRY pair may hold in consolidative mode for some time, awaiting fresh signals from the CB’s policy meeting.
Sideways-moving daily Tenkan-sen marks initial support at 6.3993, followed by rising 10SMA 6.30, which is expected to contain dips and guard pivots at 6.0833 (rising 20SMA) and 5.9607 (27 Aug trough).

Res: 6.7339; 6.7837; 6.8379; 6.9577
Sup: 6.6033; 6.5460; 6.3993; 6.3000