The EUR/TRY exchange rate shows a bearish bias in the near term.
Key drivers include:
- The interest rate differential remains unfavorable for the Turkish Lira, with the Central Bank of the Republic of Turkey expected to continue its easing measures, which may encourage further depreciation of the TRY.
- Ongoing inflationary pressures in Turkey are projected to remain elevated, while the Turkish government anticipates a weakening of the Lira, as illustrated by recent target projections.
- The Eurozone's economic resilience, aided by incoming members like Bulgaria and projected GDP growth, supports the Euro's strength.
Expect the EUR/TRY pair to trade within a range of stability characterized by recent fluctuations.
An upside risk could arise from improved geopolitical conditions in the Eurozone, which might boost investor confidence. Conversely, a downside risk is the continuation of Turkey's inflation trajectory and further central bank easing, potentially exacerbating Lira depreciation.