The USD/BRL closed yesterday’s trading near the 4.8962 ratio in what proved to be a rather tight trading session. Last Wednesday the USD/BRL was near the 4.9800 mark when the Federal Reserve made its change of direction regarding monetary policy known publicly. While the USD/BRL did traverse lower and hit a depth around 4.8750 on Thursday of last week, the price action was not exactly extraordinary.
The USD/BRL has returned to its known lower depths and its tight range shows that financial institutions and likely the central bank of Brazil are comfortable with the value of the currency pair. Having come off of highs last Wednesday which came within sight of prices not seen since the 1st of November, the USD/BRL is once again within the lower realms of its mid-term price range. The 4.9000 ratio in the USD/BRL has been a consistent magnate since the first week of August 2023.
Holiday Season and Tranquility Expected for USD/BRL
Traders who are tempted to look for strong short-term moves lower, which begin to test USD/BRL July values, may have a solid foundation for their thinking. However, being overly ambitious regarding speculative trades for the moment might lead to frustration. The approaching Christmas and New Year holidays will create less volume than normal for the USD/BRL. And it must be remembered the currency pair is not a widely traded Forex endeavor already, meaning the USD/BRL may find that its price movement becomes rather sleepy as this week progresses.
Traders looking for lower moves in the USD/BRL have to be aware that even if financial institutions think the USD will be weaker over the mid-term, that short-term considerations in quiet markets may make betting on lower moves rather hard to attain. Yes, the USD/BRL will certainly be trading, but the potential for unbalanced positions coming in without any notice could also cause momentary volatility and moves in the currency pair which do not make a lot of sense.
USD/BRL Support and the Potential for Lower Moves
- If the USD/BRL remains under the 4.9000 mark after the currency pair opens today this could be a bearish signal for traders.
- Sustained lower values could make wagering on slight technical trends enticing, but traders are urged to use take profit orders to cash out winning positions if they emerge.
- USD/BRL speculators are also reminded to use entry price orders in the thin Forex markets which will emerge, this to make sure their price fills are not met with bad surprises.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.9190
Current Support: 4.8900
High Target: 4.9350
Low Target: 4.8760
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