USD/TRY advances to 5.76 on geopolitical jitters

The Lira is sharply lower vs. its American peer at the beginning of the week, lifting USD/TRY to fresh multi-week highs in levels just shy of 5.7600.

USD/TRY focused on geopolitics, data

After three consecutive daily pullbacks, the pair appears to have regained some upside pressure in tandem with the renewed offered tone hitting the Lira at the beginning of the week.

TRY is giving away part of the recent gains and it is now motivating spot to return to the upper end of the multi week sideline theme prevailing since early September.

In fact, the Lira gained some ground in past sessions after inflation figures tracked by the CPI showed another downtick in consumer prices in September, somewhat bolstering the better tone among consumers.

However, the probable (imminent?) Turkish military incursion in Northern Syria has added some selling pressure to TRY today and is expected to keep bolstering the up move in the pair.

What to look for around TRY

The Turkish Lira has been trading within a consolidative mood vs. the US Dollar since early September. The lower bound of the range, where sits the 200-day SMA around 5.62, remains unbroken however. TRY has digested very well the two consecutive (massive) interest rate cuts by the CBRT since President R.T.Erdogan appointed M.Uysal as Governor, although investors remain sceptical of further strength in the currency in light of a still debatable ability of the country to embark on a more sustainable growth path (Erdogan set a target of 5% GDP growth in 2020) and to implement the much needed structural reforms, which remain crucial to bring in more stability to the currency and sustainability to domestic fundamentals. On the broader view, TRY looks supported by the ‘hunt for yield’, positive headlines from the US-China trade developments and prospects of extra interest rate cuts by the Federal Reserve.

USD/TRY key levels

At the moment the pair is gaining 1.05% at 5.7442 and a surpass of 5.7913 (high Sep.11) would aim for 5.8476 (50% Fibo of the May-August drop) and then 6.0027 (monthly high Aug.26). On the other hand, the next support emerges at 5.6748 (55-day SMA) followed by 5.6358 (200-day SMA) and finally 5.5344 (low Aug.16).