USD/TRY drops to fresh 3-day lows in sub-5.7300 levels

  • The pair extends the correction lower to sub-5.7300 area.
  • TRY appreciates to the vicinity of the 200-hour SMA.
  • US-Turkey talks remain in centre stage over S-400 system, F-35 jets

The Turkish Lira is gathering pace for yet another session and pushing USD/TRY back to the 5.7200 region, or fresh 3-day lows.

USD/TRY upside capped near 5.8300

After climbing to fresh weekly lows in the boundaries of 5.8300 the figure on Tuesday, TRY has managed to reclaim some buying interest and dragged spot to the proximity of the key 200-hour SMA just above the 5.7200 milestone.

In the meantime, negotiations between the US and Turkey remain live with the Russian S-400 missile defense system in centre stage along with US made F-35 jets. The recent meeting between Turkey’s Defense Minister H.Akar and his US peer P.Shanahan appear to have met some common ground, allaying at the same time the threats of US sanctions against Ankara.

Further TRY support comes from the broad-based sentiment supporting the riskier assets and the persistent offered bias hitting the buck.

In the domestic docket, it is worth mentioning that Turkish Industrial Production contracted less than expected on a year to February, somewhat adding wings to the Lira.

What to look for around TRY

The Lira is expected to remain under pressure in the near to medium terms, always tracking the performance of the risk-associated complex as well as geopolitical issues including the US, Russia and Syria and political effervescence following the recent municipal elections. In addition, market participants will remain vigilant on the implementation and progress of the structural reforms announced last week, 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.

USD/TRY key levels

At the moment the pair is losing 0.29% at 5.7467 and a break below 5.7217 (200-hour SMA) would aim for 5.7046 (10-day SMA) and then 5.5406 (200-day SMA). On the other hand, the next up barrier lines up at 5.8286 (high Apr.16) seconded by 5.8413 (2019 high Mar.22) and finally 5.8707 (high Oct.23 2018).

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