USD/TRY grinds above 18.00 at yearly top ahead of US PCE Inflation, Fed’s Powell

• USD/TRY seesaws around eight-month high, stays mildly bid during four-day uptrend.
• Downbeat Turkish data, inflation fears and chatters of US sanctions over ties with Russia favor bulls.
• US Core PCE Price Index for July, Fed Chair Jerome Powell’s speech at Jackson Hole will be crucial.

USD/TRY bulls keep reins at yearly highs, taking rounds to 18.20 heading into Friday’s European session, as the US dollar recovers ahead of the key data/events. Also fueling the Turkish lira (TRY) pair are the geopolitical fears surrounding Turkiye.

It’s worth noting that the quote rises for the fourth consecutive day and has ignored downbeat US dollar performance the previous day amid softer data from Home. That said, Turkish Capacity Utilization and Industrial Production both eased in August to respectively 76.7% and 102.1 from their previous readouts of 78.2% and 103.7 in that order.

On the other hand, the second estimate of the US Gross Domestic Product (GDP) Annualized improved to -0.6% in the second quarter (Q2) versus -0.9% flash estimations and -0.8% market forecasts. Further, US Initial Jobless Claims dropped to the lowest levels in seven weeks, to 243K for the week ended on August 19 versus 253K expected and a revised down prior of 245K.

It should be observed that the US warning of levying sanctions on Turkish products, due to Ankara’s ties with Russia, also appears to propel the USD/TRY prices.

Elsewhere, the market’s sour sentiment ahead of the Fed’s preferred inflation release and crucial Jackson Hole speech seem to favor the USD/TRY bulls. Adding to the sour sentiment could be the headlines surrounding China, Iran and Taiwan.

While portraying the mood, the S&P 500 Futures part ways from Wall Street’s gains and print mild losses around 4,195. Additionally portraying the risk-off mood is the two basis points (bps) of an increase in the US 10-year Treasury yields, at 3.045% by the press time.

Looking forward, USD/TRY prices are likely to remain firmer as a weak risk profile and Turkish resistance to higher rates may help buyers. However, Fed Chair Powell needs to defend the hawkish moves to keep the pair of bulls in the driver’s seat. Elsewhere, the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred inflation gauge, needs to cross the downbeat forecasts to keep the Turkish lira pair directed towards the north.

Technical analysis

USD/TRY remains on the way to the 20.00 round figure, with the previous yearly top surrounding 18.35 acting as an intermediate halt, until the quote drops below a six-week-old support line near 18.10 by the press time.