USD/TRY stays firmer around yearly high of 17.80, US PMIs, Fed in focus

• USD/TRY dribbles around the highest levels since December 2021, flashed earlier in the day.
• CBRT maintained status-quo despite nearly 80% inflation, repeats expectations of disinflation.
• US dollar regains upside momentum as Fed hawks flex muscles, US S&P Global PMI for July eyed for intraday directions.

USD/TRY bulls keep reins around the yearly peak of 17.80, at 17.72 by the press time of early Friday morning in Europe. In doing so, the Turkish lira (TRY) pair justifies the market’s lack of confidence in the nation’s central bank’s latest moves ahead of the key US data and the next week’s Federal Open Market Committee (FOMC).

The Central Bank of the Republic of Türkiye (CBRT) left its benchmark interest rate, the one-week repo rate, unchanged at 14.00% while matching market expectations on Thursday. While conveying the news, Reuters mentioned that Turkey's central bank held its policy rate at 14% for a seventh straight month as expected on Thursday, despite inflation surging to near 80% and a global tightening cycle, and it repeated that disinflation was expected to begin.

Elsewhere, the US Dollar Index (DXY) picks up bids to refresh its intraday high around 107.00, up 0.40% on a day, as sour sentiment joins sluggish yields to help the greenback pare latest losses. Even so, the DXY braces for the first weekly loss in four while extending the July 14 reversal from a nearly two-decade high.

The greenback’s weekly losses could be linked to the US Treasury yields as the benchmark 10-year bond coupons marked the biggest daily slump since mid-June the previous day, as well as eyes the second consecutive weekly loss. It’s worth noting that the European Central Bank’s (ECB) 50 basis points (bps) rate hike and the Transmission Protection Instrument (TPI) also exerted downside pressure on the greenback.

On Friday, the reassessment of the post-ECB optimism and fears of an aggressive rate hike from the Fed, when it meets during the next week, helps the US dollar to remain firmer. Also underpinning the greenback’s safe-haven demand could be the market’s anxiety ahead of the preliminary figures of the US S&P Global PMIs for July.

Looking forward, USD/TRY traders should pay attention to the US catalysts, as well as any major criticism of the CBRT move, to determine further moves of the pair, expectedly on the north.

Technical analysis

USD/TRY is on the way to the late 2021 peak of 18.36 unless breaking the seven-month-old previous resistance line, around 17.30 by the press time.