- USD/TRY retraces previous rally to 15.00 zone.
- The focus of the markets continues to be on Ukraine.
- Turkey’s year-end CPI forecast is now at 40.47%.
After the new highs of 2022 around 15.00, the USD/TRY lost some bullish momentum and dropped to the current 14.70 region by the end of the week.
USD/TRY eyes geopolitics, CBRT
tUSD/TRY is now trading on the defensive for the first time after nine consecutive daily gains, under selling pressure following new yearly highs due to alternating trends in risk appetite as well as persistent uncertainty in the geopolitical landscape.
The depreciation of the Turkish lira has accelerated in recent days with growing geopolitical concerns stemming from Ukraine, which at the same time morphed into a sharp rise in crude oil and commodity prices in general, all of which impacted the Turkey’s economic prospects.
Meanwhile, the pair is expected to remain under scrutiny in light of the upcoming Turkish central bank (CBRT) meeting, where the consensus remains tilted towards a steady hand when it comes to any policy rate move.
On the economic docket, data for January showed that Turkey’s retail sales turned out 1.5% monthly and expanded 7.9% vs. the same month in 2021. Additionally, industrial production expanded 7.6% in the last twelve months, the current account deficit narrowed to $7.11 billion. and the year-end CPI forecast rose to 40.47% in March.
What to look for around TRY
Further bullish momentum pushed the pair to close yearly highs around 15.00. The Turkish lira is forecast to remain under the microscope 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 retracing 0.69% to 14.7146 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 14.9889 (11 Mar 2022 high) followed by 18.2582 (20 Dec all-time high) and then 19.00 (round level).
Source: Fx Street
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