The Brazilian Real gained additional value versus the US Dollar late last week and early this week. While the currency awaits full volume later today as the Americas come online and begin to trade, the BRL has consistently tested support levels as it has gained value against the US Dollar the past few weeks.
A critical support level of 5.0000 was broken recently and this has certainly caused additional sellers of the US Dollar against the BRL to jump into trading the forex pair. Yesterday’s trading finished on a strong note for the BRL as it pressed up against support and kept pushing lower. Now the question is if the solid trend of selling the USD/BRL will continue short term?
There is good reason to suspect the BRL will test support levels further. The Brazilian Real is now solidly within its value realm of mid-March before forex traders dumped many global currencies and hid in the perceived safe havens of the US Dollar and the Japanese Yen. More importantly the support level of 4.7000 for the USD/BRL is approaching quite rapidly and yesterday’s rapid selling of the pair challenged the 4.8000 juncture.
A trading gap for the USD/BRL was evident late last week as the Brazilian Real gained favor and found traders selling the US Dollar against the South American currency. Important technical indications also show that the 4.6000 will be considered a critical support level for the USD/BRL and if this support level should fail to hold traders will certainly aim for a target of 4.5000.
Yes, there is always the possibility the US Dollar could reverse and gain against the Brazilian Real in the short term. Traders will have to keep their eyes on the 4.9000 level as they speculate on the movements of the pair. An important resistance mark psychologically exists near the 5.000. If the USD/BRL did reverse with buyers jumping into the market, some speculators could be tempted to pursue more selling opportunities if these resistance levels get touched. The BRL trend appears to be strong short term and sellers of the USD/BRL cannot be faulted for using perceived resistance levels higher as opportunities to look for reversals lower.
Brazilian Real Short Term Outlook:
Current Resistance: 4.9000
Current Support: 4.7000
High Target: 5.1000
Low Target: 4.4000
