The USD/BRL is not a widely speculated currency pair for global day traders participating on Forex platforms. It is largely considered a specialty asset and may not even be available via all brokers. However, traders who pursue the USD/BRL and swim in its waters are likely waiting for today and tomorrow with anticipation. Not only is U.S inflation data coming short and near-term, but the U.S Federal Reserve will release its FOMC Statement tomorrow. The USD/BRL could see its tight price range expand and become rather intriguing.
The CPI and PPI data, along with the Fed’s pronouncements are certain to cause volatility in global Forex. The USD/BRL has been within a rather tight range the past month and has incrementally crawled higher. Support and resistance the past handful of weeks has largely been between 4.8500 and 4.9500 with outliers once and a while. And for the moment the USD/BRL continues to float next to its one month highs, making the currency pair rather attractive for consideration.
Fair Value Considerations as U.S Federal Reserve Looms for USD/BRL
The USD/BRL opened trading yesterday with a gap higher and tested the 4.9600 level promptly. However, as the day progressed a slight reversal lower was demonstrated as the 4.9300 to 4.9400 ratios saw price action. The USD/BRL closed near the 4.9385 ratio on Monday. As today’s trading opens it will coincide with the release of the CPI data from the U.S, which will cause the broad Forex markets and the USD/BRL to react.
However, financial institutions trading the USD/BRL are likely considering the notion about the Forex pair’s equilibrium mid-term. The past month of trading certainly highlights the stability of the USD/BRL, today’s U.S inflation data, followed by tomorrow’s PPI statistics and the Federal Reserve will test current viewpoints. The USD/BRL was trading at highs around 5.0600 in late October, and this was after it had moved higher previously in the first week of October. Financial houses sold the USD/BRL in direct correlation to other major currency pairs since late October.
Volatility Today and Tomorrow are Probable for the USD/BRL
- Day traders with a taste for the USD/BRL, who are used to the rather polite price range, should be ready for the prospect of wider action to emerge today and tomorrow. Financial institutions may try to change positions based on their outlook.
- If the U.S. Federal Reserve hints at a more neutral approach to its monetary policy via the FOMC Statement tomorrow, this could help the USD/BRL move lower.
- However, traders should not get overly ambitious and have reasonable targets that cash out winnings via take profit orders.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.9470
Current Support: 4.9310
High Target: 4.9990
Low Target: 4.8640
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