Mayhem as Turkey’s President, Recep Tayyip Erdogan fires central bank governor

• Turkish central bank governor sacked in the wee hours of the night and replaced immediately.
• The lira is likely to lose traction against USD come Monday; projected down leg eyes the 100 SMA and the 50 SMA.

Turkey’s central bank Governor, Murat Uysal has been fired by the country’ President, Recep Tayyip Erdogan. Interestingly, Uysal was shown the door on Friday night in what seemed like a typical move to avoid direct market reaction as well as scrutiny from the press.

A former foreign minister has already been chosen to replace the outgoing governor. The decision to have Uysal out of his job barely 16 months after appointment comes amid a record slump in the lira which has elevated the danger of a currency crisis.

TRY likely to lose ground against USD

USD/TRY closed the trading on Friday at 8.5227 after hitting a wall at 8.6000.  Since early November, the lira has consolidated between 8.4000 and 8.6000. However, with the news regarding the sacking of the governor hitting the market on Monday, we could see a leg down under the 50 Simple Moving Average. If sell orders increase, the pair could crumble to the 100 SMA in the 4-hour time frame.

USD/TRY 4-hour chart

On the other hand, robust support is expected at 8.4000 which might see a rebound by the lira. It is worth noting that the bearish outlook will be invalidated if TRY gains ground against USD and breaks above the range resistance at 8.6000.