USD/TRY: Off weekly low as Turkish President Erdogan’s disapproval ratings stay high

• USD/TRY snaps two-day downtrend, picks up bids around intraday top.
• CBRT kept benchmark rate unchanged at 14.00%, signaled disinflation process to start soon.
• Turkish President Erdogan’s approval rating stabilizes but the dissenters are still more.
• Pre-FOMC anxiety, fundamentals from Turkey will be important for the near-term direction.

USD/TRY consolidates weekly losses around $13.40, up 0.10% intraday heading into Friday’s European session.

In doing so, the Turkish lira pair rises for the first time in three days as voters in Turkey remain unimpressed by President Recep Tayyip Erdogan’s mammoth measures, per the Reuters data conveying sentiment.

“President Tayyip Erdogan's approval rating rose 2.1 percentage points in January, a poll by Metropoll Research showed on Thursday,” said Reuters. However, the news also mentioned, “Erdogan's approval rating rose from 38.6% in December to 40.7% in January. The number of those who do not approve of the president has fallen 2.8 percentage points in that time, it said. Erdogan's disapproval rating still remained higher though, at 54.4%.”

It’s worth noting that the Turkish central bank, Central Bank of the Republic of Turkey (CBRT), announced its policy decision this Thursday and left the one-week repo rate unchanged at 14%, in line with the market expectations, which in turn helped USD/TRY to print two-day downtrend despite broad US dollar rebound.

The pair’s weakness past the CBRT decision could be linked to the rate statement suggesting further strength of the TRY, due to easing inflation fears. “Expect the disinflation process to start on the back of measures taken,” mentioned CBRT.

Looking forward, a lack of major data/events will keep challenging USD/TRY pair traders amid the pre-Fed anxiety.

Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar

Technical analysis

A clear downside break of a three-week-old previous support line and the 200-SMA, joining each other around $13.53 at the latest, keeps USD/TRY sellers hopeful to retest the $13.00 threshold.

However, the monthly bottom surrounding $12.75 becomes a tough nut to crack for them afterward.