The USD/BRL closed around the 5.0590 ratio on Wednesday. The currency pair has turned in a tight price realm the past week. While weekly Unemployment Claims data will come from the U.S. today, these statistics will not affect the USD/BRL greatly. The values of the currency pair will likely continue to react to behavioral sentiment which remains rather tentative. Financial institutions are showing signs of distress regarding their outlooks and continue to keep U.S. Treasury yields remarkably high.
While the USD/BRL was trading near the 5.0970 mark last Friday, and on the 6th of October flirted within sight of the 5.2200 level, speculators and financial houses have managed to create some selling pressure. However, the low this Tuesday near the 5.0080 ratio has not seen another challenge. Support for the time being via near-term technical perceptions appears to be around the 5.0285 vicinity.
USD/BRL Speculators Should Not Get Comfortable with the Current Price Range
The rather tight price range of the USD/BRL has proven rather attractive the past handful of days for speculators who like to take advantage of swings in the market created by reversals as support and resistance get tested. This may continue to prove a worthwhile short-term tactic in the USD/BRL, but traders need to stay on alert for the potential of gaps and sudden price velocity to emerge.
There will not be major economic data from the U.S. via official reports in the near term, but nervous sentiment continues to react to rather risk adverse conditions in the global markets. The coming election in Argentina should have no major effect on the USD/BRL either. Traders have certainly priced in another interest rate hike from the U.S Federal Reserve on the 1st of November too. Adverse conditions are being created by unknowns regarding the U.S Fed and global geopolitics.
USD/BRL Impetus via Geo-Politics in the Short-Term
- The broad markets and the USD/BRL will likely continue to react to gyrations caused by international news regarding the Middle East, but traders need to understand financial institutions are accustomed to the dynamics of political chaos.
- Thus, the price range of the USD/BRL may remain consolidated, and speculators in the near term can continue to try and take advantage.
- However, while a tight price range has been demonstrated, USD/BRL traders should use solid risk management to guard against surprising developing news or rhetoric from afar that affects Forex and the currency pair quickly.
Brazilian Real Short-Term Outlook:
Current Resistance: 5.0690
Current Support: 5.0450
High Target: 5.0910
Low Target: 5.0190
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