USD/TRY prints three-day downtrend as Turkish President Erdogan, FinMin Nebati defend lira bulls

• USD/TRY reverses the late Tuesday’s corrective bounce off monthly low during three-day fall.
• Turkey’s President Erdogan appoints new Deputy Finance Minister, removes Tax Inspection Chief, FinMin Nebati reiterates government’s commitment.
• Market sentiment sours amid thin volume, mixed Omicron updates ahead of key US data.

USD/TRY remains on the back foot for the third consecutive day, down 2.10% intraday near $12.30 ahead of Wednesday’s European session.

In doing so, the Turkish lira (TRY) pair justifies the plethora of measures taken by President Recep Tayyip Erdogan to defend the interest rate cuts. On his back is the recently appointed Finance Minister (FinMin) Nureddin Nebati.

After a slew of ‘dollarization’ measures, Turkey’s Erdogan announced new changes to the finance ministry and income tax office, per the country's official gazette. “Turkish President Tayyip Erdogan appointed Murat Zaman as deputy finance minister and removed the chairman of the Tax Inspection Board, Necmi Keskinsoy, from office on Wednesday,” said Reuters.

On the other hand, FinMin Nebati was also spotted by Reuters while lauding the government’s legal action against speculative market comments. The news quotes Nebati’s interview with the state broadcaster TRT Haber while saying, “Nebati also said that the government is committed to single-digit inflation, high growth and a current account surplus.”

Elsewhere, market sentiment sours as the previous optimism linked to the government’s easy activity restriction measures and vaccine hopes fail to sustain. Adding to the risk-off mood is the wait-and-see mode ahead of the US Q3 GDP and the CB Consumer Confidence for December.

To portray the mood, the US 10-year Treasury yields dropped two basis points (bps) to 1.465% whereas the S&P 500 Futures decline 0.13% intraday even as the Wall Street benchmarks snapped a three-day downtrend.

Moving on, USD/TRY traders may pay more attention to the domestic news, while also watching the US data, for short-term direction.

Technical analysis

A clear downside break of the 21-DMA level of $13.61 keeps USD/TRY sellers hopeful. However, the 61.8% Fibonacci retracement level of August-December upside and 50-DMA, respectively around $12.10 and $11.50, restrict short-term declines.