The USD/BRL ended yesterday’s trading near the 4.8100 mark which is a vicinity the currency pair also traversed last Friday. The rather consolidated price range of the USD/BRL within its lower value range, which has essentially been demonstrated since the second week of June may look like an opportunity for speculators who enjoy tight trading realms. The potential to use quick-hitting trades while looking for limited action that challenges support or resistance is intriguing.
However, for speculators to take advantage of the tight prices being displayed it needs to be said, volatility is always a possibility in an unexpected fashion. For those who are experienced and believe the current price realm will hold even as the U.S. Federal Reserve lurks in the distance and is likely to deliver another hike on the 26th of July, this may be a chance to wager. The USD/BRL has certainly produced rather calm waters the past week with a range between 4.7750 and 4.8500 with only minor outliers occurring.
U.S Federal Reserve May Have to Change their Monetary Policy Stance
Recent U.S. data has been complex. While inflation has demonstrated it is rather stubborn, there have been some signs it is decreasing. And last week’s improved consumer sentiment data while surprisingly strong, suddenly turned into weaker than expected official Retail Sales figures from the U.S. yesterday. Meaning the U.S. central bank may be able to become less aggressive regarding interest rate hikes in the near term.
- Traders looking to be sellers of the USD/BRL on slight moves higher cannot be blamed in the short term. Traders should be aware the opening quotes on the USD/BRL can produce momentary volatility and gaps.
- Current resistance near the 4.8300 to 4.8400 levels may be targeted for conservative traders looking to sell the USD/BRL while looking for reversals lower.
Entry Orders, Stop Losses, and Take Profits a Tactical Choice in the USD/BRL
Because of the recent tight trading in the USD/BRL, a trader may be tempted to use more leverage than normal while betting. However, speculators need to remember all it takes is a moment of unexpected data or news to end tranquil market conditions. The USD/BRL looks like it may edge lower, and traders cannot be blamed for having bearish perspectives. However, they also need to bet with money they can afford to lose should the trade go against them.
Traders looking for support levels near 4.8000 to become vulnerable should not be overly ambitious. Looking for prices near the 4.7900 to 4.7800 ratios does look viable, but traders may have to hold a position overnight if the USD/BRL doesn’t produce enough price action. Traders should therefore make sure overnight carrying charges are not too high with their brokers.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.8200
Current Support: 4.8050
High Target: 4.8390
Low Target: 4.7810
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