USD/BRL: Resistance Levels Being Tested By Brazilian Real

Robert Petrucci

The past few days of trading have seen buying of the USD/BRL and a loss of value for the Brazilian Real and it is testing important resistance levels.

Risk appetite for the Brazilian Real has eroded the past few trading days and seen a wave of USD/BRL buyers step up and push the forex pair towards important resistance levels. However, after touching up against the 5.4700 juncture yesterday the USD/BRL has seen a bit of a reversal as selling has crept into the pair. The early month of June saw the Brazilian Real attain better values, and it has traded largely between 4.9000 and 5.4000 frequently. This range has allowed traders an opportunity to speculate while taking advantage of short term trends.

The Brazilian Real has seen plenty of speculative trading due to the coronavirus pandemic. The government of Brazil has received plenty of criticism for its handling of the virus and it has dealt with devastating statistics regarding infection rates. However, the country has also managed to keep its economy open in many respects and this has attracted traders who see opportunities via its technical charts which have seen legitimate trends.

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After trading positively for sellers of the USD/BRL, the Brazilian Real from early June until the middle of the month, proved capable of creating better values. However the past two weeks of trading have seen buyers of the USD/BRL emerge, who may have suspected the Brazilian Real had gained too much value. As trading begins to get underway in the Americas today, risk sentiment appears fragile. Mixed results are expected on equity indices today as investors try to look for stability.

The Brazilian Real found sellers’ short term step into the market this morning and the USD/BRL is near short term support. Support around the 5.3500 to 5.3700 level could prove important inflection points for speculators today. If these levels are broken and selling of the USD/BRL builds the pair could test the 5.3000 juncture fairly easily.

However, risk sentiment is in question globally and the USD/BRL has shown a tendency to find buyers after a test of support levels the past two weeks. If speculators are looking at higher resistance levels near the 5.4600 mark and believe they are vulnerable, stepping into the USD/BRL with a buying position at these levels could be justified given the recent trend of the Brazilian Real.

Brazilian Real Short Term Outlook:

Current Resistance: 5.4600

Current Support: 5.3700

High Target: 5.5000

Low Target: 5.3000

USDBRL

About the Author
Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.
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