USD/TRY within range around 6.06, trade stays in focus

  • TRY stays sidelined above the 6.00 handle.
  • The pair remains supported by the 21-day Simple Moving Average (SMA).
  • Lira looks to trade, domestic politics, data.

The Turkish Lira remains on the defensive on Friday, lifting USD/TRY to as high as the 6.10 handle, where it lost some upside momentum.

USD/TRY keeps the attention on trade, politics

The spot is up for the second session in a row today, recovering part of the ground lost during the first half of the week and managing well to keep the trade within the weekly range and at the same time limiting usual volatility around TRY.

The trade front and its impact on the EM space continues to drive the mood around the Turkish currency, while geopolitics and the domestic scenario continues to grab attention.

Regarding the latter, market participants remain vigilant on the AKP and CHP campaign to attract undecided voters ahead of the new municipal elections in Istanbul to be held on June 23.

What to look for around TRY

Volatility around the Turkish Lira has subsided somewhat as of late, although the broader sentiment around the EM FX space should continue to influence on the currency as well as tensions on the US-China trade front. In addition, friction between the AKP and its main opposition party ahead of the municipal elections in Istanbul is also emerging as another source for Lira volatility. Further out, potential US sanctions following the purchase of the Russian missile defence system keeps lingering over the country as well as sanctions over Iranian crude oil exports. Adding insult to injury, the independence and credibility of the CBRT should remain under the microscope against the omnipresent conflict between the Erdogan’s administration and bank’s authorities.

USD/TRY key levels

At the moment the pair is gaining 0.25% at 6.0587 and faces the next hurdle at 6.13111 (high May 13) seconded by 6.2457 (2019 high May 9) and then 6.8353 (high Aug. 30 2018). On the other hand, a breach of 5.9472 (low May 10) would aim for 5.7094 (low Apr.17) and finally 5.6573 (200-day SMA).

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