While the Brazilian government continues to face a storm of criticism from worldwide health organizations regarding its handling of coronavirus and the rate of infections and deaths which have occurred in Brazil, officials from the nation continue to suggest the economy will rebound quickly. The USD/BRL has developed a tight range in the past five trading sessions. After testing resistance last week near the 5.4500 juncture the Brazilian Real has shown the ability to reverse lower and experienced increased selling of the USD versus the Brazilian Real.
In early trading today the Brazilian Real is near important short term support around the 5.3250 level. Slight reversals higher have certainly occurred when technical support has been touched, but this juncture has proven vulnerable before and levels near 5.3000 remain targets and was hit only a week ago. The USD/BRL has seen plenty of trading between the 5.2700 and 5.4400 levels the past month, but it must be said these support and resistance levels have shown the ability to crumble too.
The USD/BRL remains heavily influenced by global risk appetite. Global equity indices have expressed optimistic buying, Brazilian stock have gained the past month too and early calls from the futures markets for equity indices in the Americas appear to be headed in a positive direction today.
Certainly, the markets can turn negative, but traders should always keep behavioral sentiment via financial institutions in mind. No, there are no guarantees upwards momentum on indices will continue, but the current trend should be taken into account.
Speculators who believe support levels of the USD/BRL appear vulnerable may be willing to enter a selling position within a value range of 5.3400 to 5.3700 if they are patient and use limit orders. The five-day trend of the USD/BRL has been choppy, it has seen plenty of short term reversals, but technical resistance has done a nice job of producing downward momentum.
Sellers of the USD/BRL may have a target of 5.3000 in mind as a take profit juncture, and optimistic speculators who are selling may actually look at the 5.2500 mark potentially. Short term traders must be prepared for reversals upwards which have been part of the trading landscape for the USD/BRL and stop-loss limit orders near the 5.3600 to 5.38000 levels may prove pragmatic.
Brazilian Real Short Term Outlook:
Current Resistance: 5.3600
Current Support: 5.3150
High Target: 5.4000
Low Target: 5.3000
