USD/TRY still targets 6.00 on Lira weakness

Another session with TRY losing ground should be far from surprising these days. In fact, USD/TRY remains firm although a tad lower from daily highs beyond 5.9700 the figure seen earlier in the day.

USD/TRY focused on sentiment, data

Despite today’s selling bias, TRY has somehow managed to retreat from yesterday’s yearly lows vs. the buck in levels just shy of the 5.9800 handle recorded in the wake of the CBRT monetary policy meeting.

It is worth recalling that despite the Turkish central bank left unchanged the One-Week Repo Rate at 24.00%, it removed the pledge to tighten the monetary conditions if needed, giving the statement a dovish twist and fuelling the selling pressure around TRY.

In the data space and earlier in the week, Capacity Utilization in Turkey ticked higher to 75.0% this month and Manufacturing Confidence improved to 105.5 during the same period.

What to look for around TRY

The Lira is expected to remain under heavy pressure for the foreseeable future. While the broader sentiment around the EM FX space is seen influencing on TRY, domestic drivers would also collaborate with the price action. Among these factors is the ongoing uncertainty around the possibility of a rerun of the mayoral elections in Istanbul, threats of US sanctions over the purchase of a Russian missile defence system and the progress in the implementation of the recently announced structural reforms, 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. In addition, TRY could see some acceleration of the selling impetus as market participants continue to adjust to the recent dovish message from the CBRT.

USD/TRY key levels

At the moment the pair is gaining 0.17% at 5.9337 and faces the next up barrier at 5.9796 (2019 high Apr.25) seconded by 6.2277 (monthly high Oct.4 2018) and finally 6.5497 (high Sep.13 2018). On the other hand, a break below 5.8315 (200-hour SMA) would open the door for 5.7263 (21-day SMA) and then 5.7094 (low Apr.17).