USDTRY – rate hike may temporarily cap weakness, but risk of testing 5.00 barrier remains in play

The USDTRY bounced to 4.79 zone on Thursday, retracing the big part of Wednesday’s post-CBRT 4.88/4.51 fall, but the outlook for lira slightly improved after Turkish central bank eventually raised interest rate.
The CBRT’s emergency meeting on Wednesday resulted in raising its late liquidity window rate by 300 basis points to 16.5%, in attempts to turn lira from recent three-month steep fall which spiked to lira’s new record low at 4.9273 on Wednesday.
Threats of attacking psychological 5.00 barrier prompted policymakers to act, but the second increase after LLW April’s hike is more likely to cap lira’s weakness rather than sparking stronger rally.
Focus turns towards CPI release on June 4 which is likely to show inflation rising further and weigh on lira, and CBRT’s regular interest rate meeting on June 7, which would provide more clues about lira’s near-term performance.
Rising 10SMA (4.5059) which contained Wednesday’s post-CBRT dip, marks solid support, along with psychological 4.50 support.
Extended dips would face another strong support at 4.4644 (Fibo 38.2% of 2018 3.71534.9273), while resistances lay at 4.9273 (Wednesday’s high) and psychological 5.00 barrier.

Res: 4.7885; 4.8000; 4.9000; 4.9273
Sup: 4.7000; 4.6413; 4.6000; 4.5381