USD/TRY retreats below $14.00 as Turkish market intervention looms

• USD/TRY consolidates intraday losses, stays near record top.
• Turkish President Erdogan hopes lira will steady soon, further CBRT intervention teased.
• US dollar tracks firmer yields amid sluggish session, risk catalysts eyed ahead of Friday’s US CPI.

USD/TRY seesaws around $13.70, down 0.20% intraday, as Turkish lira (TRY) traders, await another central bank intervention during early Monday.

The Turkish central bank (CBRT) announced it directly intervened in the FX markets on Friday. Following that, Turkey’s President Recep Tayyip Erdoğan crossed wires, via Reuters, on Saturday while saying, “God willing we will stabilize foreign-exchange rates in a short time period.” The Turkish Boss adds, "Interest rates are a malady that makes the rich even richer and the poor even poorer.”

It’s worth noting that TRY's weakness pushes the local workers to hold strikes in Turkey. “Two Turkish unions representing more than 250,000 workers said they would hold limited strikes this week to protest against legislation covering healthcare salaries and pensions,” said Reuters.

However, Erdogan’s quest for lower rates, contrary to the hawkish hopes from the Fed, keeps the USD/TRY buyers hopeful.

That said, the US dollar tracks firmer Treasury yields as a surprise drop in US Nonfarm Payrolls (NFP) couldn’t supersede a slump in the Unemployment Rate. Also bullish for the greenback were the comments from St. Louis Fed President James Bullard who said, on Friday, “Could look at raising interest rates before completing the taper.”

Given the Fed policymakers’ quiet period before the next week’s Federal Open Market Committee (FOMC) meeting, Friday’s US inflation will be crucial for the USD/TRY traders. Should the price measure keep portraying reflation fears, the uptick in the dot-plot can’t be ruled out. Additionally, CBRT intervention and chatters over Turkey inflation, as well as Omicron, can offer intermediate moves to the pair.

Technical analysis

Multiple hurdles around $14.00 join overbought RSI conditions to trigger intermediate pullbacks. However, not even the short-term bears are likely to take the risk of entries until witnessing a daily close below the 12-day-old support line near $13.45.