USD/TRY snaps two-day uptrend around $13.50 amid sluggish markets

• USD/TRY remains pressured around intraday low, stays inside weekly trading range.
• Market sentiment dwindles as traders await Fed, Russia-Ukraine tussles escalate.
• Turkish Treasury sellers more lira bond, energy crisis pushes diplomats to visit Iran.
• Second-tier data from Turkey, US CB Consumer Confidence will decorate calendar but FOMC will be the key.

USD/TRY fails to keep the previous two-day advances, recently sidelined around $13.48 during early Tuesday.

The Turkish lira (TRY) pair’s latest losses could be linked to the market’s consolidation ahead of the key Federal Open Market Committee (FOMC) meeting, not to forget hopes of the Turkish government’s ability to defend the national currency and solve the energy crisis at home.

On Monday, Turkey’s Treasury department sold net 1,984.8 million lira of 2-year fixed-coupon bond in the auction, per Reuters. The news also mentioned the government’s selling of 10,287.5 million lira of CPI-indexed 6-year bond.

Elsewhere, a team of Turkish diplomats visits Iran after a political rift with Tehran marked the biggest ever power cut and challenged the industrial production at home.

It’s worth noting, however, that fears of the Fed rate hike and a war of words relating to the Russia-Ukraine situations exert downside pressure on the market sentiment, as well as favoring the US dollar due to its risk barometer status.

Looking forward, Turkey’s Capacity Utilization and Manufacturing Confidence for January may entertain USD/TRY traders ahead of the US CB Consumer Confidence for the said month. Though, major attention will be given to Wednesday’s FOMC amid hopes of getting clues for the March rate hike, which in turn could propel the pair prices.

Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar

Technical analysis

Failures to provide a clear upside break of a two-week-old resistance suggest the USD/TRY pair’s further grinding around $13.50. Though, higher low formation keeps buyers hopeful.