USD/TRY recedes from fresh 2019 highs near 5.8600

• The Lira depreciated to fresh yearly lows vs. the buck.
• Spot climbed to the boundaries of 5.86 in early trade.
• TRY remains under pressure despite today’s USD weakness.

After recording fresh 2019 highs near the 5.8600 handle during early trade, USD/TRY came under some selling pressure and has now receded to the 5.8300 neighbourhood.

USD/TRY focused on risk-trends, politics

TRY has reclaimed part of the ground lost in early trade on the back of a pick up in the mood surrounding the risk-associated complex and an offered bias around the greenback.

The pair confirmed its underlying bullish view earlier today, advancing to fresh yearly highs in the boundaries of 5.8600 the figure just to recede a tad soon afterwards.

The Lira regained some composure today tracking the sharp up move in crude oil prices, with the European reference Brent crude trading in levels last seen in late October 2018 beyond the $74.00 mark per barrel.

In the meantime, the Lira is expected to stays under the microscope in light of the still unresolved issue involving Turkey, a Russian defense system and US F-35 jets. Furthermore, jitters on the domestic political arena stay well and sound around the potential rerun of the mayoral elections in Istanbul.

What to look for around TRY

The outlook on the Turkish Lira should be under scrutiny in the upcoming months. While the broader sentiment around the EM FX space is expected to influence on TRY, domestic drivers would likely prevail when determining its 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 potential purchase of a Russian 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.

USD/TRY key levels

At the moment the pair is gaining 0.41% at 5.8302 and faces the next up barrier at 5.8608 (2019 high Apr.22) seconded by 5.8707 (high Oct.23 2018) and finally 6.2277 (monthly high Oct.4 2018). On the other hand, a break below 5.7698 (200-hour SMA) would open the door for 5.7094 (low Apr.17) and then 5.6393 (21-day SMA).