EUR/TRY Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank is expected to maintain current interest rates, while the Central Bank of Turkey recently cut its policy rate, widening the gap in monetary policies between the two.
• Risk/commodities: Oil prices are trading at 90-day highs, indicating higher energy costs that could pressure the Turkish economy and influence TRY value.
• One macro factor: Fitch has upgraded Turkey's outlook, reflecting improvements in foreign exchange reserves, which could bolster confidence in the TRY.
Range: Movement likely to drift within the recent range as the rate stabilizes above average levels.
What could change it:
• Upside risk: A strong GDP report from the Eurozone could support the euro further.
• Downside risk: Continued depreciation of the lira or a significant drop in oil prices could negatively impact the EUR/TRY rate.