USD/TRY: Turkish Lira renews record low as US Dollar licks its wounds ahead of US inflation, Fed

• USD/TRY refreshes all-time high amid two-day winning streak, grinds near the top of late.
• US Dollar pares recent losses as traders reassess Fed bets ahead of US inflation.
• Cautious mood, pre-event positioning also favor greenback buyers amid sluggish start to the key week.
• Preparations for more rate hikes from newly appointed CBRT Governor, geopolitical tension in Turkiye also justify Turkish lira’s latest fall.

USD/TRY stays on the front foot at the all-time high of around 24.00 as markets brace for this week’s central bank decisions and top-tier data during early Monday. That said, the Turkish Lira (TRY) pair refreshed the record high to 23.95 amid the US Dollar’s broad run-up before retreating to 23.62 heading into the European session.

That said, the Turkish Lira (TRY) pair previously ignored the appointment of a new Governor for the Governor of the Central Bank of the Republic of Türkiye (CBRT). The reason could be linked to the US Dollar’s broad rebound, as well as the TRY trader’s positioning for the rate hikes.

In the last week, Turkish President Erdogan appointed Hafize Gaye Erkan, a finance executive in the US to lead the CBRT while trying to reverse the course of previous rate cuts and battle with the heavy inflation at home. Additionally, news of a blast in a factory in the Turkish capital Ankara and the seizing of $1 billion of counterfeit Turkish money in Istanbul seem to also weigh on the TRY.

It should be noted that the markets remain dicey as traders await the US inflation data and the Federal Reserve (Fed) Interest Rate Decision. That said, Turkish Unemployment Rate and Current Account data for April can offer immediate moves.

US Dollar Index (DXY) dropped in the last two consecutive weeks, mildly bid near 103.60 at the latest, even as downbeat prints of the US activity numbers for May joined disappointing employment clues to weigh on the US Dollar. The reason could be linked to the market’s cautious mood ahead of Tuesday’s US Consumer Price Index (CPI) and concerns that the US employment and inflation conditions aren’t yet suitable for the rate hike pause. Recently, Former President of Boston Federal Reserve Bank, Eric Rosengren, tweeted in favor of expecting a hawkish skip this week.

That said, the latest United States Initial Jobless Claims jumped to the highest levels since September 2021 whereas the US ISM Services PMI, S&P Global PMIs and Factory Orders also printed softer outcomes for May and pushed back the Fed hawks, which in turn weighed the US Dollar.

While portraying the mood, the US Treasury bond yields grind higher and allow the US Dollar to lick its wounds even as Wall Street and S&P500 Futures prod greenback bulls by printing upbeat outcomes.

Technical analysis

Unless declining below the latest bottom surrounding 23.00, the USD/TRY pair remains on the way to refreshing the record top. That said, the 25.00 round figure gains immediate attention.