USD/TRY bulls flirt with 19.00 as upbeat yields join cautious mood ahead of Turkish inflation

• USD/TRY keeps poking the all-time high marked in February, grinds higher of late.
• US Dollar traces US Treasury bond yields to reverse week-start losses.
• Downbeat Turkish data, geopolitical tension and CBRT’s hesitance to raise rates keep buyers hopeful.
• Friday’s Turkish CPI, US ISM Services PMI appear crucial for clear directions.

USD/TRY tests bullish commitments around 18.90 amid a sluggish session during early Thursday. In doing so, the Turkish Lira (TRY) pair takes clues from the firmer US Treasury bond yields while also portraying the cautious mood ahead of Turkish inflation data for February, up for publishing on Friday.

Hawkish comments from the key central bankers join fears surrounding China and Russia to renew the market’s economic pessimism, which in turn drowns the US Treasury bonds amid a lack of major data/events. The same joins mostly firmer US data, versus downbeat Turkish statistics, to favor the USD/TRY bulls.

Against this backdrop, the US 10-year Treasury bond yields rose to the highest levels since early November 2022 by piercing the 4.0% mark whereas the two-year counterpart rallied to the highest levels since June 2007 by flashing the 4.92% mark at the latest.  The jump in the US Treasury bond yields portrays the market’s fears, which in turn probed bulls on Wall Street and weigh on S&P 500 Futures as of late.

It should be noted that the US ISM Manufacturing PMI flashed upbeat details and allowed Minneapolis Federal Reserve (Fed) President Neel Kashkari to reiterate his hawkish bias. However, the Turkish Gross Domestic Product (GDP), trade numbers and economic confidence have all been softer in their latest readings and propelled the USD/TRY prices.

Apart from the data imbalance and hawkish Fed concerns, as well as the yields, the Central Bank of the Republic of Turkiye’s (CBRT) hesitance in lifting the benchmark interest rates joins the latest earthquake in the nation to keep the pair buyers hopeful.

Moving on, USD/TRY may keep grinding higher amid a lack of major data/events scheduled for release on Thursday. However, tomorrow’s Turkish Consumer Price Index (CPI) for February and the US ISM Services PMI for the said month will be crucial for the pair traders to watch for clear directions.

Technical analysis

Unless breaking the year 2021’s high surrounding 18.40, the USD/TRY bulls seem gradually rushing toward the 20.00 psychological magnet.