Today is another boring Summer Monday. The price action is as good as frozen in all major forex pairs and the economic calendar is not helping either. It is almost completely empty today, apart from a few minor releases. We did pick a few trades which we will explain below, but I think it is going to take ages until these forex trades close. One currency that is moving is the Turkish Lira. It made some huge moves last week and it seems like it is continuing with the same mindset today as well.

Turkish officials have been all over the news trying to stop the decline but without much success. By now, I don’t think that words can help the Lira though. The Turkish Interior Minister has vowed to take action against those who bad-mouth the Turkish economy and its currency. Judging by Erdogan’s actions in the last few years, we knew that these officials were not the cleverest bunch but this is just silly. Stocks continue to slide today, indicating a negative sentiment in the markets. Bitcoin is trying to get its act together and it is slowly creeping higher, but it doesn’t seem like a bullish turnaround after last week’s bearish move yet.

The European Session

CBRT Tries to Save the Lira – The central bank of Turkey cut the Lira required reserves today by 250 basis points and promised that it would provide liquidity to all financial organizations who might get in trouble from the crash of the Lira. The Turkish Lira popped higher for less than an hour but is back on the downtrend now.

Stocks Take A Dive – With the situation in Turkey deteriorating and more tariffs to come next month on China from the US, the sentiment has deteriorated today in financial markets. Stocks are considerably lower. They followed Friday’s direction and opened with a bearish gap lower, although they are trying to recuperate t the moment.

Italian Final CPI – The consumer price index was expected to grow by 0.2% month-on-month but it grew by 0.3%. The yearly CPI number also increased to 1.5% from 1.3%, so this is a decent inflation report from Italy.

Turkish Interior Minister Threatens Haters – The Turkish Interior Ministry said that it will close social media accounts that have provoked the increase in USD/JPY and it will take measures for those who create a negative perception of the economy. Turkey thinks this is an attack from whoever, so if you are trying to sell the Turkish Lira by buying USD/JPY then better watch your back, the state is coming for you.

The US Session

Turkey–US Tensions Continue – Tensions between Turkey and the US continue during a difficult time for Turkey and Turkey is doing its part to escalate things. Turkish Foreign Ministry said a while ago that the US should learn that it will not achieve results with threats. This is not the time for Turkey to act tough.

Russia Has A Go at the US Too – Russian officials said that retaliatory measures against the US are not ready yet. This implies that Russia will place tariffs on the US but the Russian Rubble is another currency which has been suffering lately, so this is not a good time for Russia to act tough either.

Iran Rejects Direct Talks Offer from White House – Iran’s leader Khamenei said that Trump’s offer for direct talks is not something new and he has banned Iran from holding direct talks with the US. The supreme leader bans the country. This will come back to attention when the situation in Turkey is over.

EU Is Aware of Risks from Turkey – European stocks have been declining since last Friday as the situation in Turkey deteriorates, especially bank shares and the shares of BNP, UniCredit and BBVA. The EU Commission spokesman said that the EU is aware of EU bank risks from the situation in Turkey. Will they take any measures though?

Trades in Sight

Bearish USD/JPY

• The trend is bearish
• The 50 SMA is providing resistance
• The retrace up is complete

The pullback is complete according to this chart setup

A while ago, we sold USD/JPY as this pair was retracing higher. This pair has been bearish and today the bearish move extended further to the downside. It opened with a gap lower last night and it continued lower as the sentiment deteriorated in the financial markets. Although it has been retracing higher in the last few hours, the 50 SMA (yellow) is providing resistance. It has been the 100 SMA (green) which has done this job recently, but the 50 SMA might take that role now that the downtrend has picked up pace. The stochastic indicator is also overbought which shows that the pullback up is complete. Let’s hope that the sentiment remains negative until we get our pips.

In Conclusion

The day has been pretty quiet but we are seeing some action in the US session. The market sentiment has improved a bit and safe-havens are under some light pressure, although I don’t think this will last. So, if you are thinking of selling safe-havens, you might be a bit late for that.