- The USD/BRL closed yesterday’s session near the 4.9005 mark, and this value was produced after a high of around 4.9415 was touched during the opening moments for the currency pair on Tuesday.
- Risk-averse trading in Forex is having an effect on the USD/BRL and the trend upwards since the last days of July has been evident.
- However, the USD/BRL remains in a rather consolidated range without a severe amount of turbulence.
Yes, day traders of the USD/BRL certainly should try to avoid trading when the currency pair is opening for the day, because of the frequent gaps that happen during these moments. Monday’s close around the 4.8975 ratio quickly disappeared yesterday and serves as a warning for speculators and a reason for risk management tools to be used when engaged in betting on the USD/BRL.
Risk Adverse Financial Markets as Global Nervous Conditions Remain
Technical traders of the USD/BRL may find the results from the past week and a half of trading rather interesting because of existing behavioral sentiment. Global Forex has been nervous the past few weeks as U.S. economic data has mixed with downgrades from rating agencies. Yesterday’s Moody’s downgrades to some mid and small-size banks caused the USD to get stronger against many major currencies.
Intriguingly the USD/BRL reacted by actually selling after the gap higher yesterday, the currency pair finished near lows only fractionally above Monday’s close. This puts the USD/BRL in a rather cautious position regarding potential speculative positions today. Traders should watch the opening and be mindful of sudden gaps, but they should also remember the ability the USD/BRL showed while traversing lower as the day progressed on Tuesday.
Inflation Data from the U.S and Looking Forward to Additional Risks for the USD/BRL
- From a one-week perspective, the USD/BRL is trading within the middle of its range. From a one-month perspective the USD/BRL is trading near highs and this correlates to the broad Forex market. Nervous trading appears ready to remain rather strong over the coming days.
- Behavioral sentiment in the global markets is nervous and tomorrow’s CPI and Friday’s PPI reading from the U.S. will be watched carefully regarding the inflation numbers.
- Speculators should be conservative and not overly ambitious regarding targets in the short term.
- Quick-hitting day trades which use take profit orders may prove to be a useful tactic. A range between 4.8600 and 4.9400 may be a battleground in the near term.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.9110
Current Support: 4.8910
High Target: 4.9320
Low Target: 4.8620
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