USD/TRY eases from tops above 5.8100

• The Lira depreciated to levels beyond 5.81 in early trade.
• Spot trades closer to yearly highs just below the 5.85 area.
• US Empire State Index, TIC Flows next on the docket.

The Turkish Lira is losing ground for yet another session on Monday and is prompting USD/TRY to trade at shouting distance from 2019 highs in levels shy of the 5.8500 handle.

USD/TRY focused on geopolitics, data

TRY lost further ground today despite the better mood surrounding the riskier assets and the weakness hitting the greenback.

Earlier results in the domestic docket saw the Quarterly 3-month Jobless Average rising to 14.7% in January from 13.5%m, while the Treasury showed a budget deficit of TRY 24.5 billion, all collaborating with the selling pressure in the Lira.

In addition, tensions remain high between Turkey and the US with the Russian S-400 missile defence system and US F-35 jets taking centre stage along with opposing views from both countries on the situation in Syria.

Still in Turkey, and also weighing on TRY, the ruling AK Party will apply TO THE Supreme Election Council in order to ask for a re-run of municipal elections in Istanbul.

Moving forward, Industrial Production and Retail Sales will be published tomorrow.

What to look for around TRY

The Lira is expected to remain under pressure in the near to medium terms, always tracking the performance of the risk-associated complex and specifically around the EM FX universe. In addition, market participants will remain vigilant on the implementation and progress of the structural reforms announced last week, conditio sine qua non for the start of a sustainable economic recovery and a return of the confidence in both the currency and the country. However, the new geopolitical factor involving US and Russia over a defence system could open the door for US sanctions, putting the Lira under extra pressure.

USD/TRY key levels

At the moment the pair is advancing 0.94% at 5.8001 and faces the next hurdle at 5.8233 (high Apr.12) seconded by 5.8413 (2019 high Mar.22) and finally 5.8707 (high Oct.23 2018). On the other hand, a break below 5.6740 (10-day SMA) would open the door to 5.5295 (200-day SMA) and then 5.2918 (low Mar.26).