USD/BRL: Troubling Signs amidst Consolidation and Volatility

The next two days of trading in the USD/BRL will likely provide ample wagering clues for speculators who have the desire to pursue the currency pair

The USD/BRL went into the weekend near its high water mark after trading had been completed, leaving traders with speculative considerations.

Traders should be ready for a rather intriguing opening with the USD/BRL today. After going into the weekend near the 5.4098 ratio, the USD/BRL finished close to the high that had been seen for the week. Traders now need to wait for an opening that will likely demonstrate a gap, and importantly a larger amount of volume.

The USD/BRL high last week was near the 5.4235 mark on Friday, before declining slightly in the closing hours. What makes the price action of the USD/BRL intriguing is that the currency pair stumbled to a low of nearly 5.2990 on Thursday when financial houses reacted to the notion the U.S Federal Reserve will start to soften its hawkish interest rate policy.

Trading Volumes will Create Potential Volatility Early this Week for the USD/BRL

However, instead of sustaining the realms of its lower price range, the USD/BRL reverted to an incremental climb upwards. And importantly this occurred when U.S financial houses were largely missing from Forex because of the Thanksgiving holiday.

The return of full trading volume and the fact the USD/BRL is near technical highs may be a reason for concern among speculators. Cautious traders might want to watch the first hour or so of trading to get a feel for market conditions. If the 5.4000 level is sustained this may be a rather bullish signal. The problem within the USD/BRL is, even though U.S central bank policy may be aiming for a less aggressive interest rate policy, global financial houses have concerns about the outlook for Brazilian fiscal policy.

  • Having actually had a rather consolidated week of trading and showing the ability to traverse lower towards the 5.3000 ratio needs to be considered too by speculators.
  • Traders may be able to take advantage of current USD/BRL perceptions, using support levels as a way to buy the USD/BRL and look for reversals higher.  

Short-Term USD/BRL Price Action will be a Solid Indicator

The next two days of trading in the USD/BRL will likely provide ample wagering clues for speculators who have the desire to pursue the currency pair. When full trading volume reemerges by late today and tomorrow, traders will be able to see if the 5.4000 level has been sustained. If this higher support ratio proves durable it may be a bullish signal for traders. There is certainly a chance the 5.3600 to 5.3500 values could be tested again lower, and if so, this may be a better area to try and buy the USD/BRL for conservative wagers looking for another climb upwards.

Brazilian Real Short-Term Outlook:

Current Resistance:  5.4295

Current Support:  5.3860

High Target: 5.4875

Low Target:  5.3061


Ready to trade our Forex daily forecast? We’ve shortlisted the best Forex brokers in the industry for you.

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.