The USD/BRL closed near the 4.8115 ratios yesterday, which is a solid result and demonstrates the currency pair remains near its one-year lows. Yesterday’s trading also produced a depth around the 4.7500 level which had last been seen in June 2022. The bearish momentum of the USD/BRL since the end of May cannot be argued. Except for a curious bit of data that hit financial institutions from the U.S. yesterday, that will lead USD/BRL speculators to question the short-term direction to come.
The U.S. economy Remains Stronger than Anticipated and the USD/BRL will React
While the USD/BRL was making its new lows and rewarding bearish speculators who have continued to sell the currency pair with profitable outcomes, suddenly the USD/BRL began to rise in value. Technical traders can certainly say this was a natural reversal higher after important lows were tested and caused a momentary wave of buying in the USD/BRL as a reaction. In other words, they might interpret the move higher yesterday as an opportunity to sell the USD/BRL once again.
However, traders with a fundamental inclination may look at the results and correlate the sudden upwards momentum which developed in the USD/BRL as a reaction to stronger than-anticipated U.S economic data. Core Durable Goods Orders and the CB Consumer Confidence statistics published yesterday both came in much better than anticipated. Showing the U.S. economy remains rather stubbornly consistent, even as inflation remains high and as the U.S. Federal Reserve has made the costs of borrowing more expensive. Yesterday’s data may put the U.S. central bank in a position in which it feels it must raise the Federal Funds Rate again.
The USD/BRL 4.8000 Level Remains a Key for Traders as a Target
- The 4.8000 mark remains crucial for traders of the USD/BRL and technical speculators will continue to use this level as an indicator.
- Important GDP numbers will come from the U.S tomorrow and if the report is stronger than expected via its growth ‘outcome’, this could set the stage for volatility within the USD/BRL and perhaps buying of the Forex pair.
- The USD/BRL has been rather consolidated, but the use of too much leverage can still make it dangerous to trade. Risk management should be cautious and tomorrow’s U.S Gross Domestic Product numbers will impact trading results quickly in the USD/BRL.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.8235
Current Support: 4.8010
High Target: 4.8670
Low Target: 4.7730
Ready to trade our Forex daily forecast? We’ve shortlisted the best FX trading platform in the industry for you.