Speculators of the USD/BRL were treated to a gap lower yesterday that also produced rather intriguing price velocity. As many major currency pairs continue to struggle against the USD and have lost value in the past month, the ability of the USD/BRL to demonstrate strong selling yesterday could prove to be noteworthy.
Yes, the USD/BRL has also traded higher in the past month and the current one-month price range of the currency pair is still within the upper elements of its value. However, yesterday’s move lower is intriguing because it came on a day when global markets continued to be rather fragile.
Plenty of noise continues to be heard about U.S. Treasury yields being higher, but perhaps all the noise being created means that we are nearing the climax of heightened fear. This means that if behavioral sentiment starts to calm down in the near term, perhaps Forex and the USD/BRL will resume their mid-term trends which had been rather negative for the USD up until mid and late July for many currency pairs.
BRICS Summit in South Africa Creating News Regarding Brazil
The BRICS summit in Johannesburg which officially got started yesterday has put Brazil onto center stage this week. However, it is questionable what effect the happenings in South Africa will have on the USD/BRL. Most financial institutions will listen to news from the conference, but they will also pay attention to the Jackson Hole Symposium in the U.S being conducted by the Federal Reserve. Meaning both events may create a balanced effect regarding short and mid-term perceptions.
Yesterday’s Lower Move is Intriguing but USD/BRL Remains above 4.9100 Level
- Yesterday’s opening in the USD/BRL was noteworthy, but now it will interesting to see what happens upon the opening for trading today in the currency pair.
- Having closed near a price of 4.9385 still leaves the USD/BRL above the 4.9100 mark which some traders may view as important support.
- If behavioral sentiment in the global markets can become calmer there is reason to suspect the USD/BRL may have room to traverse lower. However, market conditions remain nervous and traders should not be overly ambitious regarding short-term targets of the USD/BRL.
- If support in the USD/BRL starts to prove vulnerable around the 4.9080 ratio and sees sustained trading below, this could open the door for a test of the 4.8900 to 4.8700 levels in the near term.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.9480
Current Support: 4.9270
High Target: 4.9970
Low Target: 4.8860
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