- The USD/BRL finished Monday’s trading near the 4.9855 level.
- The past two days of trading in the USD/BRL have provided speculators with a serious amount of volatility which has likely surprised many.
- Friday’s jobs numbers from the U.S came in better than expected.
- The USD/BRL was near the 4.9100 ratio while challenging a weekly low when the strong U.S employment numbers were published. The USD/BRL finished Friday’s trading around the 4.9700 mark.
Speculators who were expecting a calm day of Forex yesterday within the USD/BRL were again given a shock. U.S Services PMI statistics came in above the anticipated reading. The USD/BRL which had already begun Monday’s trading with another trend slightly higher, gapped from nearly the 4.9975 ratio to the 5.0030 level. Trading yesterday saw a high around 5.0180 before the USD/BRL gave back some value and finished the day.
Higher Price Realm Perception and USD/BRL Resistance
The USD/BRL may see another round of volatility when the currency pair opens today, but U.S economic data will be light near-term. This means current market sentiment will likely move the USD/BRL based on the new perception that a change to U.S monetary policy is not going to happen in March.
While financial institutions are still geared towards interest rate cuts from the U.S Federal Reserve, they will have to be more patient. The fact the Central Bank of Brazil cut interest rates recently also adds to the slightly stronger USD/BRL, because of the realization the U.S Federal Funds Rate potentially will not be changed until the month of May.
5.0000 USD/BRL Psychological Level in Play for Traders
The volatility displayed the past two days of trading in the USD/BRL is likely going to start eroding today and tomorrow. However day traders should be careful with the opening of the USD/BRL to make sure they are protected against the potential of another gap occurring. The 5.0000 which was challenged briefly yesterday may become a key psychological level now in the USD/BRL, particularly if value in the currency pair is sustained above the 4.9800 realm near-term.
- Traders should make sure they use entry price orders to get ‘fills’ that meet their expectations.
- Support and resistance levels technically between the 4.9700 and 5.0100 marks may be touching points as financial institutions search for equilibrium in the USD/BRL.
Brazilian Real Short Term Outlook:
Current Resistance: 4.9890
Current Support: 4.9780
High Target: 5.0100
Low Target: 4.9695
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