USD/TRY resumes the upside and approaches 15.00

• USD/TRY reverses Friday’s losses and retests 14.90.
• Risk-on sentiment keeps weighing on the dollar.
• The CBRT is expected to leave rates unchanged this week.

The Turkish lira gives away initial gains and now pushes USD/TRY back to the proximity of the 15.00 mark on Monday.

USD/TRY: Upside capped by 15.00

USD/TRY leaves behind Friday’s inconclusive price action and resumes the upside despite the soft note in the greenback and the sharp decline in crude oil prices.

Indeed, the Turkish lira fails to capitalize the better mood in the risk complex and remains under pressure, retargeting at the same time the 2022 peaks around the 15.00 mark recorded on March 11.

Moving forward, the lira is expected to remain under pressure considering the FOMC and the Turkish central bank (CBRT) events on Wednesday and Thursday, respectively. Against that, consensus keeps pointing to a 25 bps interest rate hike by the Fed, while the CBRT is seen keeping the One-Week Repo Rate unchanged at 14.00%.

What to look for around TRY

The lira resumed the downtrend in past sessions, leaving behind three months of consolidative behaviour. Further lira depreciation came in response to higher crude oil prices following the deterioration of the geopolitical landscape in Ukraine along with the view that the Fed will start hiking rates as soon as this week. Extra risks facing the Turkish currency also come from the domestic backyard, as inflation gives no signs of easing, real interest rates remain negative and the political pressure to keep the CBRT biased towards low interest rates remain omnipresent.

Key events in Turkey this week: Budget Balance (Tuesday) – CBRT Meeting (Thursday).

Eminent issues on the back boiler: 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. Earlier Presidential/Parliamentary elections?

USD/TRY key levels

So far, the pair is gaining 0.20% at 14.8056 and a drop below 13.7143 (low Feb.25) would expose 13.5091 (low Feb.18) and finally 12.4317 (low Feb.11). On the other hand, the next up barrier lines up at 14.9889 (2022 high Mar.11) seconded by 18.2582 (all-time high Dec.20) and then 19.00 (round level).