USD/TRY struggles near six-month low as Turkey’s geopolitical risks battle US dollar weakness
|- USD/TRY stays depressed near August 2020 lows, marked last Thursday.
- Turkey hints ‘painful revenge, swift justice’ in a fight against PKK in Iraq.
- US dollar fails to defy risk-on mood amid stimulus hopes, vaccinations.
- Turkish Budget Balance, geopolitical headlines can entertain traders amid off in the US.
- USD/TRY remains mildly offered, down 0.13% intraday, near August 2020 trough while declining to 7.0260 during early Monday. In doing so, the quote struggles for a clear direction amid mixed signals of geopolitical tension at home and the broad weakness of the US currency during the inactive market hours ahead of the European session.
Turkish government conveyed the execution of 13 Turks, comprising military and police personnel by Kurdistan Workers Party (PKK) in Iraq, per Reuters. The news also quotes Defence Minister Hulusi Akar unveiling the operation details as “Forty-eight PKK militants were killed during the military operation, while three Turkish soldiers were killed and three wounded.”
The age-old fight between the Turkish government and the outlawed PKK should have propelled the quote. However, the US dollar weakness, mainly due to the hopes of a $1.9 trillion covid relief package and optimism concerning the coronavirus (COVID-19) vaccines, seems to have favored the USD/TRY bears.
That said, S&P 500 Futures and stocks in Asia-Pacific print risk-on mood whereas the US dollar index (DXY) declines 0.13% by press time.
Moving on, Turkish Budget Balance for January, prior -40.7B, can offer immediate direction but the bears are less likely to recede the controls amid a likely easy start to the week.
Technical analysis
A two-month-old downward sloping trend line, currently around 7.2215, directs USD/TRY towards July 2020 tops surrounding 6.9080.
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