USD/TRY rebound approaches 18.00 amid risk-aversion, focus on Turkish inflation, US NFP

USD/TRY prints the first daily gains in three as buyers attack 18.00 threshold heading into Tuesday’s European session. In doing so, the Turkish lira (TRY) pair justifies the market’s rush toward the US dollar amid a risk-off mood.

That said, the chatters surrounding the US-China tussle over US House Secretary Nancy Pelosi’s visit to Taiwan and the likely hardships for Chinese chipmakers appear to weigh on the market sentiment. On the same line could be the dragon nation’s readiness for a military drill in Bohai, South China Sea. Furthermore, headlines suggesting Chinese policymakers’ lack of confidence in this year's Gross Domestic Product (GDP) forecasts also contribute to the risk-off mood and drown the quote.

Elsewhere, fears of economic slowdown take clues from the latest PMIs from the US and Europe, which in turn roils the market’s mood and amplifies the risk-aversion wave. Also challenging the sentiment could be Fed Chair Jerome Powell’s indirect signals that the hawks are running out of steam.

In addition to the risk-off mood, the market’s fears of higher inflation in Turkiye and the government’s push for a no rate hike also propel the USD/TRY prices.

As a result, Wednesday’s Turkish Consumer Price Index (CPI) for July, expected 80.5% YoY versus 78.62 prior, appears an important data for the USD/TRY traders to watch. Following that, the US employment data for July, up for publishing on Friday, will be crucial to watch for clear directions. Meanwhile, the Fedspeak and the US ISM Services PMI for July could entertain traders.

Technical analysis

While the 10-DMA restricts short-term USD/TRY downside around 17.82, an upward sloping resistance line from July 08, at 18.11 by the press time, challenges the pair buyers before directing them to the year 2021 peak surrounding $18.36.