The USD/BRL has come off of highs seen last week; this as traders who have managed to survive the volatility now must wonder what is going to happen next.
The USD/BRL ended yesterday’s trading near the 5.1667 ratio, which is a high price level for the currency pair still. The USD/BRL last sustained price action at its current value in the first week of October 2023. However, the information regarding the USD/BRL is more interesting, because last week’s high touched values not seen since March of 2023.
The ability of the USD/BRL to come off the high values of nearly 5.2915 which were seen last Wednesday has likely been welcomed by the Brazilian government, financial institutions and traders who were likely caught off guard by the move. The USD/BRL last week was not only reacting to a shift in behavioral sentiment regarding the acknowledgement U.S inflation continues to prove stubborn, but it was also a reflection of Fed Chairman Jerome Powell admitting the U.S central bank is likely not going to touch the Federal Funds Rate over the mid-term.
Lower Move Still has USD/BRL within Higher Levels
Speculators of the USD/BRL have not only seen volatility upwards the past week, but they have also seen gaps on the opening of the currency pair taking place. Today and tomorrow’s trading will prove to be interesting particularly after the ability to shift into a downwards mode the past couple of days, because it will test short-term sentiment as additional tests await speculators.
The USD/BRL is now trading at marks last seen on the 15th of April, a bit more than one week ago. And this price looks technically like it will get plenty of attention via financial institutions, because when the price was produced on the 15th it came after a spike upwards in which the 5.1100 and 5.1000 marks suddenly proved a launching ground upwards.
Choppy Conditions and More Volatility to Come in the USD/BRL
On Thursday and Friday of this week the U.S will release important growth and inflation numbers which will affect Forex globally. The USD/BRL has traded in a correlated manner with other major currency pairs as the USD has exhibited strength. Speculators who believe the USD has been overbought have been able to produce some downwards momentum over the past two days, but choppiness may return to the USD/BRL as traders brace for the GDP Price Index on Thursday and the PCE Index inflation report on Friday.
- The USD/BRL has interesting resistance near the 5.1830 mark. If this mark is not toppled in the near-term this may indicate financial institutions are leaning towards a weaker USD/BRL.
- Support near the 5.1300 to 5.1200 should be watched in the near-term also. Choppiness may continue over the next two days as the important U.S data is anticipated for later this week.
Brazilian Real Short Term Outlook:
Current Resistance: 5.1725
Current Support: 5.1580
High Target: 5.1870
Low Target: 5.1340
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