USD/TRY pushes higher to 2-week peaks beyond 5.7300

• Spot clinches new 2-week highs above the 5.7300 handle.
• Turkey Current Account deficit shrunk to $0.720 billion in February.
• US-Turkey-Russia effervescence weighs on TRY.

The Turkish Lira has resumed its weekly depreciation today and has lifted USD/TRY to fresh multi-day highs beyond 5.7300 the figure during early trade.

USD/TRY looks to probable US sanctions, data

TRY is giving away part of yesterday’s gains after the Turkish government hinted at the possibility that the country could purchase more Russian missile defence systems, risking an escalation of the conflict with the US and the likelihood of sanctions.

In today’s docket, Turkish Current Account deficit shrunk to $ 0.718 billion during February, bettering initial expectations and mainly following a lower trade balance deficit, an increase in net inflows and a decrease in primary income deficit.

In the meantime, market participants continue to digest the recently announced reforms, all still surrounded by a high degree of scepticism.

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 earlier today, 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 0.75% at 5.7204 and faces the next hurdle at 5.7312 (high Apr.11) seconded by 5.8413 (2019 high Mar.22) and finally 5.8707 (high Oct.23 2018). On the other hand, a break below 5.5180 (200-day SMA) would open the door to 5.3985 (55-day SMA) and then 5.2918 (low Mar.26).