- USD/TRY is approaching the yearly high near 14.60.
- Geopolitical tensions continue to weigh on the lira.
the turkish lira loses ground for yet another session and encourages the USD/TRY to flirt with 2022 highs around 14.60 on Tuesday.
USD/TRY: Focus remains on Ukraine
USD/TRY advances for the 7th session in a row and keeps the 4-week positive streak in place due to persistent selling pressure affecting the Turkish currency, particularly exacerbated after the Russian invasion of Ukraine.
Indeed, as crude prices soared in the wake of the Russian offensive in response to disruption fears, the outlook for an economy heavily dependent on energy imports like Turkey now looks more vulnerable, which in turn fueled the selling pressure on TRY.
Meanwhile, the consensus ahead of the upcoming Central Bank of Turkey (CBRT) meeting on March 17 sees the one-week repo rate remain unchanged at 14.00%, despite domestic inflation topping 50%. in February.
What to look for around TRY
Further upside momentum motivates the pair to flirt with year-to-date highs near 14.60, while also leaving behind the 2-month consolidation theme sustained by surprising lira stability. However, the Turkish currency is forecast to remain under scrutiny amid rampant inflation, negative real interest rates, the ever-present political pressure to keep the CBRT biased towards low interest rates, and new concerns stemming from the geopolitical scenario.
Technical levels
So far the pair is up 1.31% at 14.5442 and a drop below 13.7143 (25 Feb low) would expose 13.5091 (18 Feb low) and finally 12.4317 (11 Feb low). On the other hand, the next upside barrier lines up at 14.6052 (24 Feb 2022 high) followed by 18.2582 (20 Dec all-time high) and then 19.00 (round level).
Source: Fx Street
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