USD/TRY struggles around $9.3000, ignores softer USD amid challenges for Turkey

• USD/TRY fades pullback from record top, sidelined around intraday low of late.
• Fears of Turkey being grey-listed by global financial watchdog test pair bears.
• US Treasury yields retreat from multi-day high, extending US dollar weakness.
• Fedspeak can entertain traders ahead of Thursday’s CBRT Interest Rate Decision.

USD/TRY remains pressured around intraday low of $9.2899, seesaws of late ahead of Wednesday’s European session. In doing so, the Turkish Lira (TRY) pair struggles to justify the US dollar weakness, as well as negative headlines concerning Turkey.

The Financial Times (FT) came out with the news suggesting that Turkey should be subject to special monitoring by the taskforce’s International Co-operation Review Group — a process known as “greylisting” — joining 22 other states including Albania, Morocco, Syria, South Sudan and Yemen. The news relies on two western officials to highlight the likely Financial Action Task Force (FATF) actions.

“A greylisting could strike a further blow at a time when the Turkish lira, which has lost about 20 percent of its value against the dollar this year, has hit a succession of record lows and could fall further on Thursday if, as markets expect, the country’s central bank cuts its benchmark interest rate again,” adds FT.

On the other hand, the US Dollar Index (DXY) remains heavy near the three-week low surrounding 93.70 at the latest. The greenback gauge prints a six-day downtrend while ignoring firmer Treasury yields amid hopes of further stimulus and sluggish session.

It’s worth noting that the hopes of US virus-led aid package battle Fed tapering woes as Fed Governor Christopher Waller backed hopes of monetary policy consolidation in his latest comments.

Against this backdrop, US stock futures drop 0.10% intraday whereas the US 10-year Treasury yields step back from the highest since late May while printing 1.8 basis points (bps) of an upside to 1.652% by the press time.

Looking forward, comments from various Fed policymakers may entertain USD/TRY traders ahead of Thursday’s CBRT rate decision. Market forecasts favor a 0.25% cut into the benchmark interest rates.

Technical analysis

An eight-day-old ascending trend line near $9.2635 acts as immediate support for USD/TRY traders to watch during the pullback moves. However, the pair sellers remain unconvinced until the quote stays beyond an ascending support line from August 11, near $9.0350.