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  • The pair fades the initial spike to the 5.96 area.
  • AKP keeps pushing for a rerun of Istanbul elections.
  • CBRT, Trade Balance figures, PMI, CPI next of relevance in Turkey.

After a brief test of daily highs just beyond 5.9600 the figure, USD/TRY has now deflated to the 5.9200 region, turning negative for the day.

USD/TRY looks data, risk trends

TRY is now trading on a positive note in tandem with the continuation of the upbeat mood among the riskier assets, forcing the greenback to recede further after last week’s fresh yearly tops.

In the meantime, spot is alternating gains with losses on Monday after seven consecutive daily advances, including new 2019 highs just below 5.9800 the figure recorded during last week. It is worth noting that the Lira depreciated nearly 16% since 2019 lows recorded in February to last week’s YTD peaks.

TRY is also looking to developments in the domestic arena for direction, where a rerun of the Istanbul elections stays in centre stage along with the controversy surrounding the purchase of the Russian missile defence system by Turkey.

In the Turkish calendar, inflation figures will be the salient event due at the end of the week seconded by Trade Balance figures and the CBRT minutes (Tuesday) and the manufacturing PMI (Thursday).

What to look for around TRY

The Lira is expected to remain under heavy pressure for the foreseeable future. While the broader sentiment around the EM FX space is seen influencing on TRY, domestic drivers would also collaborate with the price action. Among these factors is the ongoing uncertainty around the possibility of a rerun of the mayoral elections in Istanbul, threats of US sanctions over the purchase of a Russian missile defence system and the progress in the implementation of the recently announced 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. In addition, TRY could see some acceleration of the selling impetus as market participants continue to adjust to the recent dovish message from the CBRT.

USD/TRY key levels

At the moment the pair is losing 0.05% at 5.9263 and a breach of 5.7432 (21-day SMA) would open the door for 5.7094 (low Apr.17) and then 5.5824 (200-day SMA). On the other hand, the next up barrier lines up at 5.9796 (2019 high Apr.25) seconded by 6.2277 (monthly high Oct.4 2018) and finally 6.5497 (high Sep.13 2018).