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  • USD/TRY extends the weekly move to the boundaries of 5.85.
  • Turkey’s military expected to advance into Syria shortly.
  • US FOMC minutes coming up next on the docket.

The Turkish Lira is losing further momentum on Wednesday and is lifting USD/TRY to fresh multi-week highs near the 5.85 area.

USD/TRY up on geopolitical concerns

Following Tuesday’s doji-like session, the pair has resumed the upside today and clinched levels last seen in early September in the boundaries of the 5.85 level, just to receded somewhat afterwards.

TRY has come under renewed downside pressure as of late in response to heightened geopolitical effervescence, including Turkey, Syria and the US. Indeed, Turkey keeps accelerating its preparations for the imminent military campaign in Northern Syria, aimed to establish a ‘safe zone’. The operation will also target terrorists groups such as the Daesh (IS), the PKK, the SDF/PYD and the YPG.

Nothing expected data wise in Turkey, while the publication of the FOMC minutes should keep the attention on the buck in the near term.

What to look for around TRY

The Turkish Lira has exacerbated its depreciation in past sessions in response to geopolitical concerns after the country announced a military campaign in Northern Syria. On another front, TRY has digested very well the two consecutive (massive) interest rate cuts by the CBRT since President R.T.Erdogan appointed M.Uysal as Governor, although investors remain sceptical of further strength in the currency in light of a still debatable ability of the country to embark on a more sustainable growth path (Erdogan set a target of 5% GDP growth in 2020) and to implement the much needed structural reforms, which remain crucial to bring in more stability to the currency and sustainability to domestic fundamentals. On the broader view, TRY looks supported by the ‘hunt for yield’, positive headlines from the US-China trade developments and prospects of extra interest rate cuts by the Federal Reserve.

USD/TRY key levels

At the moment the pair is gaining 0.13% at 5.8356 and a surpass of 5.8463 (monthly high Oct.9) would aim for 5.9416 (61.8% Fibo of the May-August drop) and then 6.0027 (monthly high Aug.26). On the other hand, the next support emerges at 5.7536 (32.8% Fibo of the May-August drop) followed by 5.6809 (55-day SMA) and finally 5.6411 (200-day SMA).