USD/TRY struggling around 3.7700

The Turkish Lira remains sidelined vs. the greenback at the beginning of the week, with USD/TRY hovering over the 3.7700 area.

USD/TRY focus on the CBR, politics

The Lira is looking to extend its upside momentum following Friday’s sharp recovery, sending the pair to 2-day lows in current levels and ahead of tomorrow’s CBRT monetary policy meeting.

Market consensus expects the central bank to tighten its monetary policy, particularly in response to a pick up in domestic consumer prices, which rose at an annualized 8.53% during December (from 7%).

Adding to the effervescence around TRY, the Turkish Parliament has approved on Sunday a new draft constitution, opening the door for a potential presidential system of government. A referendum (probably in April) will have the last word on the bill, which will become law if it gets more than 50% approval.

The potential approval of these reforms has already sparked fresh political jitters in the country as it could boos the power of current President R.T.Erdogan.

USD/TRY key levels

At the moment the pair is up 0.05% at 3.7703 facing the next hurdle at 3.8361 (high Jan.20) ahead of 3.8430 (high Jan.19) and finally 3.9423 (all-time high Jan.11). On the other hand, a breakdown of 3.7989 (low Jan.18) would aim for 3.7161 (low Jan.13) and then 3.6941 (20-day sma).