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  • The Lira remains on the defensive near 6.20 vs. the buck.
  • The pair trades in levels last seen in early October 2018.
  • Domestic political effervescence weighs on TRY.

The selling bias has not abandoned the Lira so far and is now keeping USD/TRY to levels close to yearly peaks in the 6.2000 ara.

USD/TRY looks to data, politics

The Turkish Lira remains under downside pressure so far this week as market participants continue to digest the recent announcement by the Electoral Board authority (YSK) of a rerun of the municipal elections in Istanbul on June 23.

In addition, TRY is suffering the escalation of tensions in the geopolitical scenario involving Israel, Iran and Russia, while the EM FX space is not giving any respite either on the back of increasing jitters over the US-China trade dispute.

On the domestic data universe, Turkish Industrial Production figures are due next week along with Current Account data, Retail Sales, Budget Balance.

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 likely escalation of tensions between the government and the opposition ahead of another mayoral elections in Istanbul on June 23 as well as threats of US sanctions with the Russian missile defence system and the ban to purchase Iranian crude oil in the centre of the debate. In addition, 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, will also be under scrutiny. Adding insult to injury, the independence and credibility of the CBRT should remain under the microscope against the omnipresent conflict between the Erdogan’s administration and bank’s authorities.

USD/TRY key levels

At the moment the pair is gaining 0.53% at 6.1836 and faces the next up barrier at 6.1981 (2019 high May 8) seconded by 6.2277 (monthly high Oct.4 2018) and finally 6.5497 (high Sep.13 2018). On the other hand, a break below 6.0005 (200-hour SMA) would open the door for 5.8867 (21-day SMA) and then 5.7094 (low Apr.17).