USD/TRY: Bears regain the upper hand following recent peaks near 16.50

USD/TRY now looks consolidative in the upper end of the recent range and trades close to recent yearly peaks near 16.50.

USD/TRY now looks to upcoming key data

The beleaguered Turkish currency manages to regain some buying interest and forces USD/TRY to recede to the negative territory for the first time after five consecutive daily advances on Friday. It is worth mentioning that the lira is down around 23% vs. the greenback so far this year.

Market participants, in the meantime, continue to assess Thursday’s reluctance to act on rates by the Turkish central bank despite inflation in the country is running at around 2-decades high (as per April figures).

Moving forward, investors are expected to shift their attention to next week’s release of Q1 GDP results (May 31) and inflation figures gauged by the CPI (June 3).

What to look for around TRY

USD/TRY keeps the upside bias well and sound and looks to consolidate the recent surpass of the 16.00 yardstick for the first time since late December 2021.

So far, price action in the Turkish currency is expected to gyrate around the performance of energy prices, the broad risk appetite trends, the Fed’s rate path and the developments from the war in Ukraine.

Extra risks facing TRY also come from the domestic backyard, as inflation gives no signs of abating, real interest rates remain entrenched in negative figures and the political pressure to keep the CBRT biased towards low interest rates remain omnipresent.

Eminent issues on the back boiler: FX intervention by the CBRT. Progress (or lack of it) of the government’s new scheme oriented to support the lira via protected time deposits. Constant government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Structural reforms. Upcoming Presidential/Parliamentary elections.

USD/TRY key levels

So far, the pair is losing 0.50% at 16.2508 and a breach of 14.6836 (monthly low May 4) would expose 14.5458 (monthly low April 12) and finally 14.5136 (weekly low March 29). On the upside, the initial hurdle lines up at 16.4554 (2022 high May 26) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level).