USD/BRL: Concerns in Brazil Affecting Real’s Forex Sentiment

Robert Petrucci

The USD/BRL is near important one-month resistance levels as concerns in Brazil continue to escalate and ripple through Forex.

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The USD/BRL has found it nearly impossible to achieve a sustained bearish trend. The reason why this is important to highlight is because the USD has been weak against many other major currencies in Forex, but because of coronavirus concerns and economic implications which plague Brazil, the USD/BRL has not been able to correlate to other currency pairs.

The USD/BRL is trading near important resistance levels which have proven adequate in the past month. The question for speculators is if the higher levels of the USD/BRL will be able to hold tight and produce a meaningful reversal lower that can be taken advantage of, or if the Brazilian real will continue to falter more and actually see the USD/BRL demonstrate a stronger bullish move and challenge highs made September through the first week of November.

The 5.5000 level could prove to be a key psychological level for the USD/BRL and traders should monitor this value. The USD/BRL, when compared to many other Forex pairs, is not wildly volatile; it actually trades in a rather polite manner. But what makes the Brazilian real difficult to trade is its choppiness. Traders need to use short-term outlooks when trading the USD/BRL, but the lack of sudden spikes in the Forex pair makes using limit orders attractive from a speculative point of view.

Patience is needed when trading the USD/BRL. However, speculators who pursue the Forex pair likely also find the ability of shorting or going long the USD/BRL with quick-hitting trades via technical perspectives quite engaging. The past week of trading has produced slight gaps upon the USD/BRL opening, and on Friday, the pair opened with higher movement. This happened on a day that also saw some negative trading in Brazilian equities.

The USD/BRL may remain a troublesome Forex pair and the rather negative news regarding coronavirus in Brazil is not helping sentiment. Yes, the pandemic has certainly hit worldwide and all nations have been affected. However, the economic implications shadowing Brazil apparently have caused unease within financial institutions, and the USD/BRL remains within a seemingly weak stance via uneasy sentiment surrounding the Brazilian real. Buying the USD/BRL and looking for current resistance levels to be tested may prove to be the prudent speculative wager short term.

Brazilian Real Short-Term Outlook:

  • Current Resistance: 5.4900
  • Current Support: 5.4200
  • High Target: 5.5800
  • Low Target: 5.3600

USD/BRL chart

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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