USD/TRY bulls stay on the way to 19.00, Fed, US NFP eyed

• USD/TRY picks up bids to refresh all-time high, snaps two-day losing streak.
• CBRT’s warning to banks over FX transactions, policy divergence with the Fed keeps buyers hopeful.
• Risk-negative catalysts also strengthen bullish bias even as pre-Fed anxiety tests upside moves.

USD/TRY renews record top near 18.65 during early Monday in Europe, around 18.60 at the latest, as the US dollar cheers broad risk-aversion ahead of the key data/events. That said, the Central Bank of the Republic of Türkiye’s (CBRT) fear and Turkish support for the grain deal also seem to propel the Turkish lira (TRY) pair.

US Dollar Index (DXY) adds 0.20% intraday while printing the first gains on a day in three. In doing so, the greenback’s gauge versus the six major currencies benefit from the hawkish Fed bets, especially after Friday’s upbeat prints of the Fed’s preferred inflation gauge, namely the US Core Personal Consumption Expenditures (PCE) Price Index rose to 5.1% YoY for September versus 5.2% expected and 4.9% prior. However, the fifth quarterly fall in US private consumption raised fears of the US Federal Reserve’s (Fed) slower rate hike starting in December, which in turn tests DXY bulls.

On the other hand, Turkey's central bank warned local banks about taking "necessary measures" about conducting forex transactions with foreign banks during night hours, a letter sent to lenders and seen by Reuters showed on Friday.

Elsewhere, Macau’s lockdown of a casino resort and fears emanating from Russia gain major attention during a sluggish session and propel the USD/TRY prices. “Russia, which invaded Ukraine on Feb. 24, halted its role in the Black Sea deal on Saturday for an ‘indefinite term’ because it could say it could not ‘guarantee the safety of civilian ships’ traveling under the pact after an attack on its Black Sea fleet,” reported Reuters.

It should be noted that the US 10-year Treasury yields seesaw near 4.00% after snapping the 10-week uptrend while the US equity future prints mild losses even after Dow Jones braces for the biggest monthly jump since 1976.

Looking forward, the second-tier US activity numbers and the aforementioned risk catalysts could weigh on the USD/TRY prices. Even so, the Fed’s rejection to bow down keeps the gold bears hopeful.

Technical analysis

A two-week-old ascending support line, near 18.50 by the press time, restricts the short-term USD/TRY downside. Meanwhile, the 19.00 round figure will precede the 20.00 psychological magnet to lure bulls. That said, overbought RSI (14) and a month-old trading range suggests that the buyers are running out of steam.