
Forex Trading For Beginners
Watch Video On How Forex Trading Works For Beginners Step By Step Tutorial Or you can head on...
The Turkish lira’s exchange rate against the euro (EUR/TRY) has become a bellwether of emerging-market stress and policy uncertainty. With Turkey’s economy in turmoil and Europe’s currency markets closely watching, the EUR/TRY pair is globally important. Turkey is a major trading partner of the European Union (accounting for over 41% of Turkish exports), and shifts in the lira affect trade flows, commodity prices and tourism. A sliding lira also raises geopolitical concerns, as Turkey straddles East–West trade routes. In short, TRY/EUR captures both regional economic ties and broader risk sentiment: a weak lira can signal political turmoil or unchecked inflation in Turkey, while a strong euro can reflect global safe-haven demand or Europe’s economic developments.
This article examines the current sentiment around EUR/TRY and the deep fundamentals behind it. We analyse technical indicators (like RSI, moving averages, and MACD) on recent charts and recount the currency’s price history. We review the latest economic data out of Turkey and the Eurozone – from inflation to growth – and survey policy actions (central bank moves, interest rates, fiscal trends) and geopolitics (political events, trade wars, regional stability) that are driving the pair’s swings. We also gather expert views and forecasts from analysts and institutions on where EUR/TRY might head in the short, medium and long term. Finally, we outline key scenarios and risks that could accelerate or reverse these trends. Throughout, we cite the latest Bloomberg, Reuters, central bank and other reliable sources to give an up-to-date and comprehensive picture of EUR/TRY.
As of mid-May 2025, EUR/TRY trades around ₺43–44 per euro. After hitting year-to-date lows in the high 30s, the pair has recently surged, briefly touching new highs near ₺44 by early May. That is close to its all-time peaks. According to Bloomberg and ECB data, the lira weakened through April–May and EUR/TRY has been in the low-to-mid 40s. For context, the previous high in late 2024 was around ₺38.21 (statista), and the mid-2024 high was about ₺34–35, so the lira has lost roughly one-quarter of its value against the euro in the past year.
This sharp move has put the EUR/TRY technical indicators on notice. Moving averages are trending up: the 50-day moving average now sits above the 200-day average, reflecting the rapid uptrend (the so-called “golden cross” on a longer view). In the daily chart, EUR/TRY is trading well above both its 20- and 50-day SMAs (as shown by many charting services), indicating bullish momentum. For example, short-term scanners note an “overall uptrend” on daily charts, with recent closes above the 50-day SMA. The Relative Strength Index (RSI) on the weekly chart has climbed toward high levels (often around 60–70), which suggests the pair was becoming somewhat overbought after a steep rise, though it has not yet reached extreme (above 70) in most data. The MACD (Moving Average Convergence Divergence) indicator on weekly or daily charts has turned positive, confirming bullish momentum – in other words, the fast line has crossed above the slow line in recent weeks.
In contrast, very short-term (hourly) technical scans show a temporary pullback. For instance, a recent one-hour chart analysis flagged EUR/TRY as “strongly bearish,” with 89% of moving-average signals bearish. This simply means there was a brief retracement amid profit-taking after the latest rally. But on longer timeframes, the technical outlook remains skewed for further euro strength. Overall, most chart setups view the pair as in an uptrend: long-period indicators (weekly/monthly) are “neutral to bullish,” and price action sits above rising moving averages.
Market sentiment among traders reflects these technical cues. Retail sentiment surveys (like Myfxbook) show almost all small speculators have been short EUR/TRY (betting on a stronger lira), often at much lower prices (averaging about ₺31). This is an extreme contrarian signal – typically when 100% of retail positions are on one side, a reversal often follows. In this case, small traders have been caught offside: their short EUR/TRY trades are losing as the pair moves up. Professional analysts and banks have been more cautious: a majority now warn of further TRY weakness in the near term. For example, a central chart service reports that EUR/TRY is “near a new high record,” reflecting the lira’s weakness. In summary, broad technical readings point to current bullish momentum for EUR/TRY (bearish for TRY) but with some indications (like RSI) that a short-term pause or pullback could occur after the recent spike.
To put the current quote in perspective, EUR/TRY has seen dramatic swings over the past two years. In 2022, the lira first collapsed amid unorthodox monetary policy, taking EUR/TRY from the low 15s to above 20. The euro peaked at around ₺21 in late 2022. During much of 2023, the pair traded in the mid-20s range. However, starting in late 2023 and into 2024, political shifts (including a change to more orthodox policy under Finance Minister Mehmet Şimşek) briefly stabilised the lira, allowing EUR/TRY to fall below ₺31 in late 2023. In 2024 Q4, the euro weakened slightly, and EUR/TRY was mostly in the low-to-mid 30s.
The biggest move came in early 2025. In March, amid political turmoil, EUR/TRY jumped from the upper 30s to over ₺42 against the U.S. dollar-equivalent level (the exact EUR price was around ₺42–43). ECB data show that in March 2025 EUR/TRY reference rates averaged about ₺39–40, but by late April, it had risen above ₺43. In early May 2025, the rate briefly touched ~₺43.90 – marking an all-time high (surpassing the previous high of late 2022). Essentially, the lira has lost an additional ~15–20% since January 2025 alone (continuing a multi-year slide).
In summary, EUR/TRY is near record highs. This reflects the lira’s multi-year depreciation trajectory: from around ₺7 per euro in 2020, to ~₺38 in late 2024, to now ~₺44 in May 2025. This steep decline (over 500% depreciation from 2020) has been driven by Turkey’s inflation crisis and monetary policy swings. We will analyse below how Turkey’s economy and policy have powered these moves.
Turkey’s economy has been under severe strain. Inflation remains extremely high, economic growth is slowing, and foreign reserves are low. Key recent data and reports include:
Inflation: April 2025 inflation was 3.0% month-on-month, taking the annual rate to 37.86%. (The Reuters poll had expected ~38%.) Food, energy and import-linked prices all contributed. Yearly inflation peaked near 75% in May 2024, then moderated to ~40% by year-end, only to resume rising slightly in early 2025 after the lira’s plunge. In short, inflation is still near 40% and far above the central bank’s targets.
Growth: The Turkish economy grew 3.0% year-on-year in Q4 2024, bringing full-year 2024 growth to 3.2%. That beat forecasts, helped by domestic and foreign demand and lower oil prices. However, this growth is now slowing. The economy went through a technical recession in mid-2024, and 2025 growth is seen as weaker. An April Reuters poll forecasts ~2.9% growth in 2025. Finance Minister Şimşek calls this “slower growth” acceptable, emphasising that it came on the back of disinflationary policies.
Current Account and Reserves: Turkey’s current account deficit is moderate (expected ~1.4%–1.5% of GDP in 2025–26), partly thanks to weaker imports, a tourism rebound and higher exports. However, central bank reserves have been drained by FX interventions. The EBRD noted reserves fell from over $60 billion to under $20 billion after March’s turmoil. (Much of this was due to selling hard currency to defend the lira.)
Central Bank Policy: The big story is monetary policy. By early 2024, Turkey’s central bank had cut rates from 50% to 42.5%. This aggressive easing fueled inflation. In March 2025, following market turmoil, the bank unexpectedly raised its key rate by 350 basis points to 46%, halting the easing cycle and signalling a fight against inflation. It also raised the overnight lending rate to 49%. The bank’s minutes (April 25) said it would keep a “tight stance until inflation shows a sustained decline,” citing a now “stronger lira” and slowing demand. In polls, economists expect rates will be gradually cut again (to ~35% by end-2025) as inflation eventually falls. But for now, interest rates remain among the highest in the world, which does support the lira somewhat (relative to if rates were lower).
Political/Economic Reforms: Since Finance Minister Şimşek’s 2023 appointment, Turkey has moved toward more conventional policies: restoring central bank independence, encouraging foreign investment and fiscal consolidation. Şimşek claims this “economic transformation is on track”. The IMF-EBRD outlook for Turkey improved in late 2023 (pulling in foreign funds), and Turkey attracted global investors into 2024. But the March arrest of Istanbul’s opposition mayor derailed this: the EBRD says Turkey was on a “slow but steady” path to disinflation before the event. The aftermath stalled rate cuts and weakened confidence. In short, Turkey’s fundamentals are a mix of very high inflation (negative for TRY), slowing growth (negative), ultra-high interest rates (positive), and foreign-exchange weakness (negative). The net effect so far has been a weaker lira.
For the euro (EUR side), conditions are mixed but generally point to a gradual easing of monetary policy and modest growth:
Growth: The eurozone grew 0.4% in Q1 2025, slightly above forecasts. Core countries showed only modest expansion; much of the headline increase was due to strong growth in Ireland. Overall, growth is expected to be weak (around 0.2–0.3% per quarter) in 2025. European economies are still recovering from the 2022–23 inflation hits, and a looming U.S.–EU trade war has clouded the outlook. The eurozone growth surprise provided only a temporary boost to the euro; policy makers caution that trade tensions could dampen investment going forward.
Inflation: Inflation in the euro area has eased back to near the ECB target. Early April 2025 data showed core inflation at 2.4% (down from 2.6%), and headline inflation about 2.5%. Energy prices have declined, and wage growth is softening. These figures are a relief for the ECB. Nevertheless, service-sector prices remain sticky (around 3–4%). Overall, inflation expectations are coming down. ECB projections (April) see inflation falling to 2% by early 2026.
Monetary Policy: In response to falling inflation, the European Central Bank has moved into an easing cycle. The ECB cut its main deposit rate to 2.25% in mid-April 2025 (from 2.50%), and markets expect another 25 bp cut at the June meeting. By year-end, deposit rates may fall toward 2.0–1.75%. In essence, Europe is dialling back its post-pandemic tightness, even as the Fed (and others) are holding steady. The euro’s strength in early 2025 (partly due to relative stability) is giving way to potential weakness if ECB cuts proceed, especially if global risk sentiment deteriorates.
External Factors: A major wild card is the risk of U.S.–EU tariffs. The imposition of a 20% U.S. tariff on EU goods (and possible retaliation) has created uncertainty. While some pressure on EU prices is disinflationary (as imported costs fall), growth forecasts have been lowered. ECB officials have noted that even a small reduction in EU growth could offset inflationary effects. In summary, the euro’s fundamentals – moderate growth, tame inflation, an easing central bank – suggest only mild currency moves, but a dovish ECB implies that EUR may weaken relative to currencies of countries with higher rates (like USD or USD proxies such as TRY).
Beyond pure economics, the TRY/EUR exchange rate has been buffeted by geopolitical events and policy shifts:
Turkish Political Events: The detention of Istanbul’s mayor (Ekrem İmamoğlu) in mid-March 2025 was a watershed. It triggered massive market volatility: the lira plunged (by up to 12% vs. USD in one day), bond yields spiked, and stocks tumbled. This was widely seen as a politically motivated move, raising fears of rule-of-law erosion. The episode drained investor confidence: the EBRD noted it “stymied [Turkey’s] path to slowing inflation” and forced a sudden policy reversal. (Before March, Turkey had been gradually cutting rates as inflation fell; the mayor’s arrest “short-circuited” that easing.) In short, political risk in Turkey has become a major exchange-rate driver. Any future political shocks – such as electoral turmoil, escalation of internal conflicts, or big policy shifts by President Erdoğan – could send EUR/TRY sharply higher.
Central Bank Actions: As detailed above, the Central Bank of Turkey (CBT) has swung from rate cuts to sharp hikes. Its unexpected April 2025 decision to hike to 46% was explicitly aimed at stabilising the currency. The bank also sold tens of billions of dollars from reserves (over $40bn) to support the lira. These moves did provide short-term relief: by late April, the lira was ~5% stronger than its March low. However, markets remain sceptical that policy has fully turned the corner. Polished language aside, CBT officials (like Deputy Governor Akçay) have signalled they will keep a “tight policy stance” but eventually plan to resume cuts once inflation is under control. How and when the central bank shifts back to easing will be a key risk for EUR/TRY. If cuts come too early (while inflation is still high), the lira could crash again. If the bank holds off too long, Turkey’s economy might slow sharply, also weakening the currency.
Inflation and Interest Rates: The fundamental divergence in inflation between Turkey and Europe (tens of per cent vs. ~3%) is crucial. High Turkish inflation erodes the real value of the lira and incentivises depreciation (via the real-interest rate mechanism). Although nominal rates in Turkey are very high, real rates are still often negative (46% minus ~40% inflation yields only +6% real, while the Eurozone has mildly positive real rates). This makes TRY an unattractive currency to hold. On the other side, the ECB’s easing (yield down to 2.25%) means the euro is less attractive against high-yielding emerging currencies – but given Turkey’s huge inflation risk, the euro remains safer. Thus, the interest-rate differential is another key factor: until Turkish inflation falls substantially, TRY/EUR will stay under pressure.
Political Stability: Turkey’s political stability is in flux. Having flipped to more orthodox economic policies under a technocratic finance minister, President Erdoğan has since reversed course on some issues (central bank independence was questioned, and frequent interventions occurred). The reelection of Erdoğan in 2023, combined with new security operations, adds uncertainty. Meanwhile, Eurozone politics (e.g. elections, debt crises) can also matter: a crisis in Italy or Germany, for example, could weaken the euro. Currently, the euro’s strength is partly due to relatively stable politics in Europe compared to Turkey’s chaos. The longer Turkey’s internal politics destabilise, the worse the lira will fare.
Global Risk and Commodities: The lira is also sensitive to global risk appetite and commodity prices. Turkey imports much oil and gas, so energy prices feed its inflation. Recently, oil is modestly higher (around $70/barrel), which adds inflationary pressure. On the other hand, if geopolitical tensions ease (e.g. resolution in Ukraine, stable Middle East), global markets could rebalance. But risk-off episodes (like a U.S. market crash) tend to send safe havens like USD and, to a lesser extent, EUR higher, which would likely coincide with a weaker TRY.
In sum, policy and geopolitics are major drivers for EUR/TRY. Any sign of renewed central bank loosening in Turkey could trigger a new slide in the lira. Conversely, strong intervention (rate hikes or reserve use) can temporarily prop it up. But political turmoil (elections, legal uncertainty) has historically overwhelmed policy steps, causing sharp drops. In contrast, the euro is now more influenced by global factors (trade war, ECB policy) than Turkey-specific news, but those global factors often interplay with Turkey (e.g. U.S. tariffs hamper both EU and Turkish exports).
What do experts expect for EUR/TRY in the coming months and years? Forecasts differ, but the consensus is that the lira will likely weaken further in 2025. Here are some highlights:
Reuters Polls: In April 2025, Reuters polled 13 analysts. Most expected Turkey’s CB to cut interest rates from 46% to 44% in Q2 and to 35% by year-end. Those forecasters see 2025 inflation ending at ~29.5% (versus the bank’s target of 24%). They predict EUR/TRY rising from ~43 now to about ~48 by end-2025, reflecting that slower disinflation.
Capital Economics: This independent research group has recently raised its EUR/TRY forecasts. In a May 2025 report, they cited figures of EUR/TRY ~44.9 by end-2025 (up from ~40 earlier) due to the sustained euro strength. Even by end-2026, they see it above current levels (mid-40s). (While we cannot directly cite their paywalled note, snippets and tables suggest forecasts around EUR/TRY 40–45 through 2025.)
Trading Economics / Macro Forecasts: Some macro-models project the lira to weaken further: e.g. Trading Economics notes EUR/TRY is expected to be around 39.0 by the end of this quarter (Q2 2025) based on analysts’ models, but 43.1 in one year. This implies a further rise (lira fall) over 12 months.
Automated Forecasts (CoinCodex): AI-driven predictors like CoinCodex (not a primary source, but illustrative) suggest EUR/TRY could average around ₺48.4 in 2025, peaking near ₺54.4 by late 2025. They imply a roughly 20–25% rise from current levels by year-end 2025, and an even higher level (₺63.7) by mid-2026. Whether these extreme figures materialise depends on Turkey’s policy path, but they highlight the market’s expectation of further TRY depreciation.
Institutional Views: Banks like Goldman Sachs have predicted that Turkey must raise rates by mid-2025 to stabilise the currency. Recently, Citi and Morgan Stanley have also warned that a steep disinflation path is needed before any cuts. Fitch Ratings has noted that greater FX volatility (like we’ve seen) could hurt Turkey’s banks and investment sentiment. In short, the overall expert view is that TRY has more room to fall, barring a policy U-turn.
Market Derivatives: The options market also implies risk-averse investors. For example, the 3-month EUR/TRY risk reversal (expensive calls relative to puts) shows traders are willing to pay to bet on EUR appreciation / TRY depreciation. (Specific numbers vary, but anecdotal evidence from FX desks indicates a skew toward bearish TRY.)
Of course, there is no consensus bull case. Some optimists argue that if Turkey truly sticks to orthodox policies (cut deficits, independence of CB, maintain high real rates) and global inflation continues to ease, the lira could stabilise – perhaps holding EUR/TRY near 40. But most analysts caution that this is a low-probability outcome. Instead, short-term (weeks/months) views generally expect EUR/TRY to remain elevated or rise further, with any pullbacks seen as brief. Medium-term (6–12 months) views almost uniformly predict a weaker lira, possibly toward 50 by year-end if current trends hold. Long-term (multi-year) forecasts hinge on macro reforms: if Turkey tames inflation to low double-digits, EUR/TRY could drift down; if not, it could even exceed 60 in a stress scenario.
Based on the above analysis, we outline several potential scenarios for EUR/TRY, along with the key risks and triggers:
Bearish TRY / Bullish EUR Scenario: In this “continuation” case, Turkey’s inflation remains stubbornly high (above 25%) and the central bank resumes cutting rates as expected. Investor confidence stays low due to political and policy uncertainty. Meanwhile, the euro remains relatively stable (or even strengthens slightly if U.S.–EU trade tensions ease). EUR/TRY could rise substantially, perhaps testing the ₺50–60 range by late 2025. Markets would likely push USD/TRY even higher, too. Triggers for this scenario include: any surprise rate cut in Turkey, a fall in global risk appetite, or a deterioration in Turkey’s fiscal discipline.
Stabilising TRY / Weaker EUR Scenario: If Turkey’s new government policies start to work – inflation cools faster than feared (e.g. oil prices fall, we get a large output gap), and the central bank holds rates firmly – the lira could stabilise or even rebound. On the other side, if the eurozone falls into recession (from trade war or internal imbalances) and the ECB cuts aggressively, the euro could weaken. In this case, EUR/TRY might drift lower (TRY appreciates). Levels of ₺38–40 could be reached by end-2025. This “improvement” scenario requires disciplined policy: no election surprises, no more emergency interventions. It is essentially what officials like Şimşek claim is underway (a steady disinflation strategy). The risk here is that markets may not believe policy is truly sustained; even talk of cuts can spook the lira.
Economic Shock Scenarios: Turkey is vulnerable to shocks. For example, a spike in oil prices (from the Middle East conflict) would worsen Turkey’s inflation and current account, causing the lira to crash. Similarly, a deep global recession or spike in U.S. interest rates could drive investors out of emerging markets, weakening TRY. Conversely, a sudden resolution of geopolitical tensions (Ukraine peace, lifting of sanctions on Turkey, etc.) could improve risk appetite and strengthen the lira. Another risk is a banking crisis (domestic or international) that leads to capital flight from Turkey.
Political Risk Scenarios: Upcoming elections or policy shifts pose binary risks. A harsh crackdown on opposition or an autocratic turn in Turkey could send EUR/TRY soaring (weak lira). On the other hand, a surprising unity government or coalition that commits to reform might give a shock rally (stronger lira). In the Eurozone, unexpected election results in a key country (e.g. a far-left victory in Italy) could suddenly weaken the euro, cushioning EUR/TRY even if the lira is weak.
Policy Intervention/Rapid Reversal: If the central bank intervenes heavily (e.g. by selling billions more FX, hiking rates further), it could temporarily reverse EUR/TRY moves. But the risk is merely temporary – once interventions cease, underlying trends resume. Watch for any such interventions: Fitch pointed out that while selling reserves curbs volatility, it drains buffers. Depletion of reserves (already low) means future defences may be limited, raising the risk of a sharp lira fall when intervention is exhausted.
In summary, the dominant risk is continued lira weakness, given the current policy trajectory and economic challenges. But a few catalysts could sharply change direction in either way. Investors and businesses should thus monitor: Turkish inflation releases, central bank meeting minutes, political news (especially legal/political interventions), and the ECB’s policy path. Any deviation from expectation in these could cause rapid EUR/TRY swings.
Key findings: EUR/TRY stands near record highs in mid-2025 due to Turkey’s acute inflation and political risks. Technical indicators show a strong uptrend (bullish EUR/bearish TRY) but signal possible short-term overstretch. Turkey’s fundamentals – inflation ~38%, high but real-interest rates near zero, slowing growth – suggest the lira is still undervalued and likely to depreciate further. Eurozone data, by contrast, show slowing inflation and an ECB moving toward rate cuts, which may make the euro more vulnerable in the coming months. Overall sentiment is cautious/bearish for TRY; retail traders are surprisingly all short (a contrarian extreme), and analysts forecast more TRY weakness ahead.
Considerations for stakeholders: For investors and traders, EUR/TRY is likely to remain volatile. Short-term rallies (in TRY) could occur on any lira-supportive news, but these may prove fleeting. Risk management is crucial: stop-losses around key levels (e.g. ₺42.5 or ₺40) may be wise if on the short side, while stop-gains or hedges could protect profits on long EUR positions. For businesses, importers (buying EUR) should be aware that their costs could keep rising if the lira slides. Exporters (receiving TRY) may benefit from a weaker currency but should hedge against sudden swings. Both parties should monitor central bank guidance closely: any hints of changing monetary policy in Turkey or the ECB might quickly alter the outlook.
In summary, the consensus of our analysis and sources is that the TRY is under significant downward pressure due to Turkey’s high inflation, rate-cut expectations, and political uncertainty. The EUR is relatively stable, but not immune to global risks. Most forecasters see EUR/TRY heading higher (TRY weaker) in the medium term. However, the situation remains fluid: any shift in Turkey’s policy credibility or external shocks could change this path. Thus, close attention to monetary policy decisions, inflation data, and geopolitical news will be crucial for anyone with exposure to the EUR/TRY exchange rate.
Comments