USD/TRY: Bulls remain vigilant above the 17.00 mark

• USD/TRY trades close to 2022 highs near 17.40.
• Türkiye Capacity Utilization dropped to 77.6%.
• Türkiye Manufacturing Confidence deteriorate in June.

The Turkish currency extends its march south for yet another session and keeps USD/TRY bid near the area of YTD peaks above 17.30 on Friday.

USD/TRY now focuses on inflation

USD/TRY navigates the third consecutive session with gains and trades in levels just shy of Thursday’s 2022 peak.

The lira continues to lose momentum despite the appetite for the riskier assets dominate the global sentiment at the end of the week and the greenback trades on the defensive across the board.

However, the unabated geopolitical concerns from the war in Ukraine and the rampant inflation continue to hurt the prospects around the currency ahead of the publication of the June inflation figures on July 4.

What to look for around TRY

USD/TRY keeps the underlying upside bias well and sound and now surpasses the 17.00 mark, an area last traded back in December 2021.

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 Türkiye this week: Consumer Confidence (Wednesday) - CBRT interest rate decision (Thursday) – Capacity Utilization, Manufacturing Confidence (Friday).

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 gaining 0.21% at 17.3717 and faces the next up barrier at 17.3759 (2022 high June 23) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level). On the flip side, a breach of 16.3136 (monthly low June 3) would aim to 16.1431 (low May 27) and finally 15.6684 (low May 23).