Societe Generale analyst, Phoenix Kalen, forecasts lira to weaken to 8.00 against the dollar in a note to clients

Kalen argues that by reaching the 8.00 threshold it will "compel Turkey to compromise on some of its strategic objectives" and forecasts that the Turkish central bank will no longer hike rates before its 13 September MPC meeting.

She also says that US-Turkey relations will probably deteriorate for now but notes that "Turkish authorities will take the lead from Erdogan, who may be unwilling to relent in the very near-term on the diplomatic front".

Additionally, she says that the lira's appreciation in the past week has been more to do with "the higher funding rates faced by lenders, and substantially higher costs of holding short-TRY positions" rather than improving sentiment.

However, Kalen forecasts that the lira could strengthen back to 7.00 against the dollar by the middle of next year.

Well, the market will take the currency pair to whatever level it sees fit. Whether or not that is 7.00 or 8.00, is something extremely difficult to gauge considering you have to factor in the euphoria, panic, distress among the other psychological aspects of the trade as well. If you're going to trade it that way, a good and simple advice is to never pick bottoms. More so in an event of a crisis. The market will turn when it turns, but if not then it's never wise to catch a falling knife.

The lira has been rather calm at the moment but holiday-thin markets in Turkey will only help to exaggerate any swings we see in the lira this week. So, hold on to your horses. It's only a matter of time before the wild ride begins again.