Yesterday’s trading of the USD/BRL finished near the 4.9407 ratio after producing a day of gains; this after the currency pair tested a low around 4.8850 on Monday. The lower depths tested on Monday challenged values not seen since early June in 2022. The near-term bearish trend of the USD/BRL is rather remarkable taking into consideration the relative strength the USD has demonstrated against many other major currencies the past few days of trading.
A slight rise in USD/BRL is Still Within the Lower Realms of the Long-Term Price Range
The USD/BRL may have gained yesterday and gotten the attention of speculators who have been anticipating a move upwards, but the currency pair actually remains within the lower elements of its long-term price range. While nervous behavioral sentiment has seemingly hit the global financial markets the past week, the USD/BRL has reacted in a rather uncorrelated manner and maintained its ability to challenge lower depths.
There will not be a lot of important economic data from the U.S. today and this may allow another day for the USD/BRL to test its intriguing price range. While financial institutions are still cautious regarding what the U.S. Federal Reserve will do in June regarding interest rates, it is clear that they are also rather calm about Brazil’s current political dynamics. The USD/BRL has exhibited a rather continuous test of support and Monday’s lows may be a sign that additional downside momentum can be found. However, it is likely to be done in slow incremental steps if it takes place.
The 4.9000 USD/BRL Level is Acting Like an Important Psychological Mark
- Traders who want to aim for lower values in the USD/BRL in the near-term need to remain conservative and not get overly ambitious.
- Speculatively, the use of quick-hitting take profits may continue to provide the best method to day trade the USD/BRL.
- Traders should also be cautious regarding the opening of USD/BRL and be aware of potential gaps, which highlight the need for entry-price orders.
Yesterday’s move upward in the USD/BRL could prove interesting too for speculators. Resistance above needs to be monitored and traders should keep their eyes on the 4.9600 to 4.9800 realms. If these levels prove durable it may be a solid place for conservative traders to ignite selling positions. A move that challenges the 5.0000 may cause nervousness and show that the 5.0200 to 5.0500 levels could be tested.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.9590
Current Support: 4.9270
High Target: 5.0250
Low Target: 4.8890
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