USD/TRY eases to $18.80 amid sluggish markets ahead of FOMC Minutes, CBRT

• USD/TRY bulls take a breather as markets turn cautious ahead of Fed Minutes.
• Mixed concerns on rate positions, earthquake at home challenges the Turkish Lira pair sellers.
• Upbeat US data underpins hawkish Fed bets but mention of policy pivot could weigh on prices.
• CBRT has been holding rates steady in the last three monetary policy meetings at 9.0%.

USD/TRY slides to $18.81, retreating from the all-time high marked the previous day, as the US Dollar eases ahead of the key Federal Open Market Committee’s (FOMC) Monetary Policy Meeting Minutes. Adding strength to the pullback moves could be the Turkish Lira (TRY) traders’ cautious mood before Thursday’s Central Bank of the Republic of Türkiye (CBRT) Interest Rate Decision.

It should be noted that the earthquake in Turkiye and Syria appeared the latest worry for the nations. However, the Turkish inflation eased in the last two months and hence defends the CBRT’s latest inaction surrounding the 9.0% interest rate.

On the other hand, strong prints of the preliminary US S&P Global PMIs for February joined the hawkish Fed bets to underpin the US Dollar Index’s first daily positive in three the previous day, down 0.07% intraday near 104.11 at the latest.

It’s worth observing that the monetary policy divergence between the US Federal Reserve (Fed) and the CBRT appears the biggest driver for the USD/TRY upside.

Elsewhere, comments from US Secretary of State Antony Blinken and Russian President Vladimir Putin weigh on the market sentiment and tease USD/TRY bulls as both suggest further tension between Moscow and Kyiv, which also includes indirect participation of the West and China of late. Though, an absence of major updates in Asia seemed to have paused the risk-off mood.

Against this backdrop, the US 10-year and two-year treasury bond yields seesaw around the three-month highs marked the previous day while S&P 500 Futures print mild gains despite Wall Street’s negative closing.

Looking forward, Turkish Capacity Utilization and Manufacturing Confidence for February could entertain USD/TRY traders ahead of the Fed Minutes. However, major attention will be given to Thursday’s CBRT Interest Rate decision for clear directions.

Technical analysis

Overbought RSI joins the $19.00 psychological magnet to challenge the USD/TRY bulls. The downside moves, however, remain elusive unless providing a daily closing below the 50-DMA support near $18.75.