USD/TRY surges to multi-week highs near 14.0000

• USD/TRY adds to weekly bounce near 14.0000.
• The pair advances despite the offered bias in the dollar.
• The focus of the markets remains on the Russia-Ukraine conflict.

The TRY depreciates even more and motivates the USD/TRY hit fresh 6-week highs around 13.9000 on Tuesday.

USD/TRY now targets 14.0000

USD/TRY advanced for the third session in a row and extends the positive start to the week despite the dollar now paring early gains on renewed entries into the risk space.

However, a further deterioration in the geopolitical scenario sent European benchmark Brent crude prices into the zone just below the psychological level of $100.00 a barrel earlier in the session, only to clip some of those gains later. On this, it is worth remembering that Turkey is a large oil-dependent economy, and higher oil prices are expected to morph into additional inflationary pressures and hurt household confidence.

The offered tone in the lira comes along with further consolidation in Turkey’s 10-year bond yields around 20%.

On the Turkish calendar, capacity utilization dipped slightly to 76.6% in February (from 77.6%) and manufacturing confidence rose to 109.8 (from 109.5) for the current month as well.

What to look for around TRY

The pair tries to break above its multi-week consolidation range and approaches 14.00. The lira, meanwhile, is surprisingly stable year-to-date, particularly after the government announced a protected lira time deposit scheme in late December and after the CBRT left the policy rate unchanged. changes in the last two meetings. However, the lira is expected to remain under scrutiny amid runaway inflation, negative real interest rates and pervasive political pressure to favor lower interest rates.

Technical levels

So far the pair is up 1.9% at 13.8299 and a drop below 13.4317 (weekly low Feb 11) would expose 13.2327 (monthly low Feb 1) and finally 12.7523 (low Jan 3, 2022). On the other hand, the next upside barrier lines up at 13.9013 (monthly high Feb 22) followed by 13.9319 (high Jan 10, 2022) and then 18.2582 (all-time high Dec 20).