USD/TRY retreats from multi-week highs around 14.90

• USD/TRY’s upside bias faltered around 14.90 on Tuesday.
• Markets in Turkey are closed due to the Eid al Fitr holiday.
• Turkey inflation figures will take centre stage on Friday.

The Turkish lira meets some buying interest on the back of the renewed offered stance in the greenback and motivates USD/TRY to made a U-turn after hitting multi-week peaks around 14.90 earlier in the session.

USD/TRY now focuses on the YTD high near 15.00

USD/TRY posted gains in eleven out of the last thirteen sessions on the back of the relentless march north in the greenback and the persistent outflows from the EM FX space.

Indeed, prospects of further tightening by the Federal Reserve keep the FX universe under intense downside pressure, falling in line with the generalized sentiment hitting the risk complex.

In the Turkish debt market, the 10y government bond yields bounce off recent lows in the 20% area and retake the 21% mark and beyond.

Moving forward, Turkish markets are expected to return to the normal activity towards the end of the week, when key inflation figures for the month of April are due along with Producer Prices and the Manufacturing PMI.

What to look for around TRY

The lira keeps the range bound theme unchanged vs. the greenback, always in the area below the 15.00 neighbourhood for the time being. So far, price action in the Turkish currency is expected to gyrate around the performance of energy prices, the broad risk appetite trends, the Fed’s rate path and the developments from the war in Ukraine. Extra risks facing TRY also come from the domestic backyard, as inflation gives no signs of abating, real interest rates remain entrenched in negative figures and the political pressure to keep the CBRT biased towards low interest rates remain omnipresent.

Key events in Turkey this week: Inflation Rate, Producer Prices, Manufacturing PMI (Thursday).

Eminent issues on the back boiler: FX intervention by the CBRT. Progress (or lack of it) of the government’s new scheme oriented to support the lira via protected time deposits. Constant government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Structural reforms. Upcoming Presidential/Parliamentary elections.

USD/TRY key levels

So far, the pair is retreating 0.19% at 14.8375 a drop below 14.6150 (monthly low April 1) would expose 14.5136 (weekly low March 29) and finally 14.4915 (55-day SMA). On the other hand, the next hurdle turns up at 14.9889 (2022 high March 11) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level).