- USD/TRY picks up bids to reverse Friday’s pullback from three-month high.
- Russia-Ukraine up for further talks after citing progress, Moscow’s attack criticized.
- US Treasury yields propel DXY amid escalating hopes of Fed’s 0.50% rate-hike on Wednesday.
- China’s covid cases add strength to the US dollar’s safe-haven demand.
USD/TRY renews intraday high around 14.90 as buyers keep reins near the highest levels in three months ahead of Monday’s European session. In doing so, the Turkish lira (TRY) pair reverses Friday’s U-turn move from the multiday top amid broad US dollar strength.
That said, the US Dollar Index (DXY) prints a three-day uptrend while tracking firmer US Treasury yields. Also underpinning the greenback are the concerns over diplomatic efforts to tame the Russia-Ukraine crisis amid Moscow’s escalated shelling.
Recently, the Russian Foreign Ministry said, per RIA Novosti, “There is no reason for UN peacekeepers to be sent to Ukraine.” The news also adds, “Further progress in regulating the situation there will depend on Kyiv's willingness to compromise.” During the weekend, negotiators from Moscow and Kyiv both cited progress and showed readiness to step-up diplomatic efforts to end the war in Ukraine, as hinted by Reuters.
Elsewhere, China reports the highest daily covid infections since May 2020 and announced lockdown in Shenzhen city. The fresh fears of coronavirus in China renew early pandemic woes and add to the USD strength. Further, record-high US inflation expectations ahead of this week’s key Federal Open Market Committee (FOMC) also keep the greenback buyers hopeful amid rising expectations of a 0.50% rate hike. The US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, rallied to a record high of 2.94% by the end of Friday’s North American session.
At home, Turkish President Tayyip Erdogan is up for a meeting with German Chancellor Olaf Scholz in Ankara. Recently, Turkish President Erdogan is on a run to improve diplomatic ties with their global counterparts. The national leader marked the first meeting with Israel in over two decades during the last week while also had talks with Greek Prime Minister Kyriakos Mitsotakis on Sunday.
Amid these plays, US five-year Treasury bond yields renew all-time high above 2.0% whereas the 10-year bond coupon also renews a one-month high of around 2.04% at the latest. However, the gains of the S&P 500 Futures seem to challenge the greenback buyers of late.
Moving on, talks between Moscow and Kyiv will be important looking forward while the Fed’s efforts to balance the inflation fears and geopolitics will be eyes as well.
Technical analysis
A daily closing beyond an upward sloping resistance line from January 03, near 14.90 by the press time, becomes necessary for the USD/TRY bulls to keep reins. Otherwise, a pullback towards February’s top of 14.66. However, 10-DMA around 14.35 appear strong short-term support to watch during the quote’s further weakness.
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