USD/BRL: Short Term Producing a Stronger Brazilian Real

Robert Petrucci

The Brazilian Real has following in the footsteps of other major currencies and gained against the US Dollar as the USD/BRL currency pair has sold off.

The Brazilian Real has produced better values the past few trading sessions as it has experienced a wave of selling via the USD/BRL currency pair. As this week of trading gets started the Brazilian Real finds itself near values it enjoyed as the month of June began nearly five weeks ago. The range for the USD/BRL in June traded largely between junctures of 4.9000 and 5.5000.

The resistance level of 5.5000 should be looked at carefully because when the mark was tested in the middle of last week it held once again. The question speculators may contemplate is if the 5.5000 mark is an inflection point, which they can continuously rely upon to bring about the selling of the USD/BRL when it is hit. The answer is no. The number doesn’t guarantee anything and in fact, it is an illusion that could cost traders a lot of money if they do not use risk management and rely solely on technical perceptions.

However, in the short term, the USD/BRL has certainly enjoyed a wave of increased selling as the US Dollar has developed weakness within the broad forex markets. This has occurred as risk appetite has once again sprung forward and created renewed momentum within global equity indices. If this buying trend via financial institutions continues within the major stock markets of nations, it carries validity to assume the USD/BRL will see its short term bearish trend pick up additional steam.

The last week of trading in June was not kind for speculators who believed the Brazilian Real should have stronger values. The USD/BRL saw a wave of buying which produced a notable range between 5.2000 and 5.5000. The short term however has seen a reversal and the Brazilian Real again has picked up value as selling has occurred.  

Short Term traders need to pay close attention if they are going to pursue the USD/BRL currency pair. It has produced a tight range with limited trends.  If risk appetite remains strong in the global markets for the next few days, the USD/BRL may continue to find it attracts sellers and an opportunity to test support levels which could prove vulnerable and worthwhile. Selling the USD/BRL at its current levels and looking for downward action may be attractive.

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Brazilian Real Short Term Outlook:

Current Resistance:  5.5000

Current Support:  5.2500

High Target: 5.5500

Low Target:  5.1500

USD/BRL

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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