USD/TRY firmer, in 4-week tops near 5.8300

  • The Lira depreciates beyond the 5.83 mark today.
  • Turkey Industrial Production contracted 5.1% YoY in February.
  • Retail Sales expanded 0.8% MoM in February.

Another day, another drop in the Lira. In fact, the bearish stance remains everything but abated around the Lira, lifting USD/TRY to fresh tops in levels just shy of the 5.8300 handle.

USD/TRY now targets YTD highs near 5.8500

The Turkish currency is losing further ground in the first half of the week, helping the pair to advance to multi-week highs just below 5.8300 the figure and to trade at shouting distance from 2019 peaks around the 5.8500 handle.

The Lira came under further pressure despite today’s results in the domestic calendar surprised to the upside. That said, Retail Sales expanded at a monthly 0.8% during February and contracted 4.9% from a year earlier. In addition, Industrial Production shrunk at an annualized 5.1% during the same period, improving a tad from January’s 7.4% contraction.

TRY is deriving extra downside pressure from the domestic political arena as well after Erdogan’s AK Party will appeal the Supreme Election Council later today for a re-run of the mayoral elections in Istanbul.

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 advancing 0.33% at 5.8186 and faces the next hurdle at 5.8286 (high Apr.16) seconded by 5.8413 (2019 high Mar.22) and finally 5.8707 (high Oct.23 2018). On the other hand, a break below 5.6978 (10-day SMA) would open the door to 5.5358 (200-day SMA) and then 5.2918 (low Mar.26).

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