- The Turkish Lira regains some ground following fresh lows.
- The pair reverses Monday’s pullback and tests 5.6000.
- Elections results confirm AKP lost Ankara, Istanbul and Izmir.
After bottoming out in the 5.60 neighbourhood, USD/TRY has now regained composure and is now forcing USD/TRY to recede towards the 5.53 region, coincident with the 100/200-hour SMA.
USD/TRY now looks to domestic politics
The pair is prolonging the choppy trade following Sunday’s municipal elections, which saw President Erdogan’s AK party losing the key cities of Ankara, Istanbul and Izmir.
However, and in spite of these results, the AKP still controls the Parliament in Ankara and the majority of votes at a national level, at least until next elections in 2023.
In the meantime, the Lira is expected to remain in centre stage as the domestic financial market is seen returning to normalcy, all following last week’s implementation of desperate measures taken in order to contain a potential crisis on the currency ahead of the elections.
Investors’ focus will now shift to any news regarding the long-waited and much-needed structural reforms already promised by Minister B.Albayrak in the run up to the local elections.
What to look for around TRY
The Lira is expected to remain under pressure in the near to medium terms, always tracking the performance of the risk-associated complex and specifically around the EM FX universe. Following the elections on Sunday, all the attention will now be on the implementation of (promised) structural reforms, conditio sine qua non for the start of a sustainable economic recovery and a return of the confidence in both the currency and the country.
USD/TRY key levels
At the moment the pair is gaining 1.04% at 5.5412 and faces the next hurdle at 5.7003 (high Apr.1) seconded by 5.8413 (2019 high Mar.22) and finally 5.8707 (high Oct.23 2018). On the downside, a break below 5.4178 (low Apr.1) would open the door to 5.3540 (55-day SMA) and then 5.2918 (low Mar.26).
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