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  • The pair remains bid albeit below yearly peaks.
  • Immediate target to the upside remains at the 6.000 handle.
  • Markets remain focused on the upcoming FOMC meeting.

The rally in USD/TRY appears to have run out of steam in the area just below the psychological 6.00 handle so far this week.

USD/TRY still looks to 6.00, attention shifts to Fed

The Turkish Lira remains well into the defensive territory for the time being, motivating spot to advance for the sixth consecutive week today although shedding some ground following yesterday’s 2019 peaks beyond the 5.9800 handle.

In the meantime, TRY stays unable to gather some traction in spite of the sharp sell off in the greenback in past sessions and the shift to a more positive stance in the risk-associated complex. In addition, TRY has practically ignored yesterday’s comments by CBRT Governor M.Cetinkaya, who said that a new tightening cycle is still possible.

Later in the session, the US calendar will be in centre stage in light of the publication of the ADP report, the ISM manufacturing and the FOMC meeting.

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 in response to the omnipresent conflicts between the Erdogan’s administration and the CBRT, which could undermine the independence of the central bank.

USD/TRY key levels

At the moment the pair is gaining 0.01% at 5.9613 and faces the next up barrier at 5.9847 (2019 high Apr.30) seconded by 6.2277 (monthly high Oct.4 2018) and finally 6.5497 (high Sep.13 2018). On the other hand, a break below 5.8933 (200-hour SMA) would open the door for 5.7850 (21-day SMA) and then 5.7094 (low Apr.17).