USD/TRY prods record top below 24.00 as Turkish President Erdogan appoints new CBRT Governor

• USD/TRY sticks to mild gains at all-time high as Turkish Lira bears take a breather of late.
• Turkish President Erdogan appoints US Finance Executive Erkan as CBRT Governor, talks of policy pivot gain attention.
• Thursday’s US Dollar weakness checked bulls but alleged economic challenges for Turkiye propel USD/TRY.

USD/TRY stays on the front foot around the all-time high below 24.00, close to 23.50 by the press time heading into Friday’s European session. In doing so, the Turkish Lira (TRY) sellers portray a cautious mood as the nation’s recently re-elected President Tayyip Erdogan appoints a new Governor of the Central Bank of the Republic of Türkiye (CBRT).

Earlier in the day, Reuters unveiled news confirming that Turkish President Erdogan appointed Hafize Gaye Erkan, a finance executive in the United States, to head Turkey's central bank as it prepares to reverse course and tighten policy after years of rate cuts and a simmering cost-of-living crisis.

The news also cites the nation’s record low foreign reserves of -$5.7 billion to mention the all-time high of the USD/TRY while suggesting a rate hike amid depleted foreign reserves, unchecked inflation and wide current account deficits.

On the other hand, the US Dollar Index (DXY) dropped the most in five weeks the previous day, licking its wounds near 103.30 of late, as downbeat US data flagged concerns of no rate hike from the Fed in June, as well as the US recession. That said, US Initial Jobless Claims rose to 261K in the week ended on June 02 versus 235K expected and 233K prior (revised). With this, the four-week average rose to 237.25K from 229.75K previous readings. Further, the Continuing Jobless Claims dropped to 1.757M in the week ended on May 26 from 1.794M prior (revised), compared to 1.8M market forecasts. Earlier in the week, the US ISM Services PMI, S&P Global PMIs and Factory Orders also printed downbeat outcomes.

Even so, the International Monetary Fund (IMF) on Thursday urged the US Federal Reserve and other global central banks to "stay the course" on monetary policy and remain vigilant in combating inflation, per Reuters.

Looking forward, the USD/TRY pair traders may witness consolidation of the latest gains should the market accepts the recent hopes of witnessing a CBRT rate hike. Even so, the pair’s momentum could be limited ahead of the next week’s Federal Open Market Committee (FOMC) monetary policy meeting. That said, Turkish Industrial Production for April can offer immediate direction to the pair.

Technical analysis

Although the overbought RSI conditions can trigger the USD/TRY pullback in a case where the Turkish Lira (TRY) price offers a daily closing below the previous day’s low of around 23.00.