USD/TRY upside capped by the 100-day SMA around 5.78

• USD/TRY trades flat with gains limited around the 5.78 area.
• Syria, Lybia in focus after Erdogan-Putin phone call.
• Attention remains on Powell’s speech later today.

USD/TRY is now exchanging gains with losses in the 5.76 region after meeting moderate resistance in the 5.78 area, where sits the 100-day SMA.

USD/TRY looks to Jackson Hole

TRY keeps the negative tone unaltered in the last couple of weeks, lifting spot to the boundaries of the 5.80 level from the sub-5.45 area seen earlier in the month.

In fact, outflows from the EM universe have accentuated in past sessions in response to the ‘flight-to-safety’ environment following rising trade jitters and deteriorating prospects of global growth.

On the geopolitical scenario, President R.T.Erdogan and his Russian peer V.Putin discussed the situation in Syria and Lybia over a phone call earlier today.

Nothing in the Turkish docket today should leave all the attention to the speech by Chief J.Powell at the Jackson Hole Symposium (14GMT).

What to look for around TRY

The current preference for safer assets in response to the US-China trade war and fears of a technical recession at some point in the next couple of years in the US has undermined extra gains in the Lira. On another front, newly appointed Governor M.Uysal appears to have inaugurated an Erdogan-sponsored easing cycle following the interest rate cut by the CBRT earlier this month. Further moves from the CBRT included the reduction of the RRR in order to boost banks’ lending and give extra oxygen to the economy. In the longer run, however, TRY looks supported by the ‘hunt for yield’, as domestic rates still look attractive in spite of the recent cut. On the more macro view, the country needs to implement the much-needed structural reforms (announced in April) to bring in more stability to the currency and sustain a serious recovery in both economic activity and credibility.

USD/TRY key levels

At the moment the pair is losing 0.03% at 5.7648 and a surpass of 5.7895 (monthly high Aug.22) would expose 5.8476 (50% Fibo of the May-August drop) and finally 5.9326 (monthly high Jun.14). On the other hand, immediate contention is located at 5.6803 (55-day SMA) followed by 5.5696 (200-day SMA) and then 5.4494 (monthly low Aug.8).