USD/TRY picks up pace and records new 2022 tops near 16.80

• USD/TRY prints fresh YTD highs near 16.80.
• The strong recovery in the dollar pushes spot higher.
• Turkey Treasury Cash Balance results come later.

The broad-based strong note in the greenback motivates USD/TRY to advance further and clock new 2022 highs in the vicinity of 16.80 on Tuesday.

USD/TRY: Next on the upside comes the all-time high past 18.00

USD/TRY adds to the positive start of the trading week and navigates the 16.70/80 band, or new YTD peaks, so far this year.

The move higher in the pair remains well underpinned by the bullish momentum around the greenback ahead of the FOMC gathering next week. Indeed, the better performance in the US dollar weigh on the risk complex and prop up outflows from the EM FX space and the rest of the dollar-denominated assets.

In the Turkish calendar, the Treasury Cash Balance for the month of May are due later in the session.

What to look for around TRY

USD/TRY keeps the underlying upside bias well and sound and now approaches the 17.00 neighbourhood, an area last traded back in December 2021.

So far, price action in the Turkish currency is expected to gyrate around the performance of energy prices, the broad risk appetite trends, the Fed’s rate path and the developments from the war in Ukraine.

Extra risks facing TRY also come from the domestic backyard, as inflation gives no signs of abating, real interest rates remain entrenched in negative figures and the political pressure to keep the CBRT biased towards low interest rates remain omnipresent.

Key events in Turkey this week: Unemployment Rate (Friday).

Eminent issues on the back boiler: FX intervention by the CBRT. 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. Upcoming Presidential/Parliamentary elections.

USD/TRY key levels

So far, the pair is gaining 1.14% at 16.7521 and faces the next up barrier at 16.7713 (2022 high June 7) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level). On the flip side, a breach of 16.3136 (monthly low June 3) would aim to 16.1431 (low May 27) and finally 15.6684 (low May 23).