USD / TRY retraces from 2022 highs, just below 14.00

• USD / TRY is trading within a tight range in the zone below 14.00.
• Turkey’s 5- and 10-year bond yields reverse the recent decline.
• High inflation continues to weigh on Turkish sentiment,

The Turkish lira halted its depreciation at just below 14.00 against the US dollar at the end of the week, all amid a tight trading range of USD/TRY.

USD / TRY remains in position for additional earnings

USD / TRY appears to have found a pretty decent barrier near 2pm on Friday, although it managed to hit new highs for the year nonetheless.

Meanwhile, the lira remains under scrutiny amid the current weak outlook, which has been exacerbated after inflation figures hit a 19-year high beyond 36% in the year to December (Monday).

From the Turkish cash markets, 5-year and 10-year bond yields reverse recent multi-session weakness and resume higher to past 24% and just above 23%, respectively. The recent drop in yields has been driven by purchases of government debt by the Turkish central bank (CBRT) according to the latest news.

What to look for around TRY

The lira resumed its downtrend as market participants continue to absorb recent inflation figures and the government’s plan to protect domestic currency deposits. The reluctance of the CBRT to change course (collision?) And the ubiquitous political pressure to favor lower interest rates in the current context of rampant inflation and (very) negative real interest rates is predicted to keep the lira down sharply. pressure for the moment. With that said, another visit to the all-time high above USD / TRY 18.00 should not be ruled out for now.

Technical levels

So far, the pair is shedding 0.24% at 13.7871 and a drop below 12.7523 (Jan 3 weekly low) would pave the way for a test of 11.9694 (55-day SMA) and finally 10.2027 (Dec 23 low). ). On the other hand, the next rising barrier lines up at 13.8967 (Jan 3 high) followed by 18.2582 (Dec 20 all-time high) and then 19.0000 (round level).