The USD/BRL closed near the 4.7925 ratio yesterday, and this followed Monday’s session which ended around the 4.7225 mark. Tuesday’s trading opened with a slight gap higher and the USD/BRL incrementally traded upwards most of yesterday. However, the reversal to the current price level of the USD/BRL happened after a low of nearly 4.6945 was produced on early Friday of last week.
The USD/BRL has correlated to the broad Forex market relatively well recently. The upwards price action which has been demonstrated the past couple of days mirrors many other major currency pairs teamed against the USD. The lows reached last Friday in the USD/BRL touched depths last seen in May of 2022. Trading conditions in the USD/BRL and other major currencies the past day have been generated via nervous sentiment it appears from financial institutions which are trying to get a firm grasp on the mid-term outlook.
Despite Short-Term Reversal Higher USD/BRL Remains Near Lows
The move higher in the USD/BRL may attract speculators who believe the upwards momentum in the currency pair will run into resistance. Traders should wait for the USD/BRL to open today to gauge short-term sentiment via larger players in Forex. The 4.8000 to 4.8200 realms will certainly get attention from day traders who sense these realms may act as rather durable resistance in the near term.
The U.S. yesterday published intriguing economic data which somehow didn’t translate into a weaker USD. The ISM Manufacturing PMI reading came in below expectations, and the costs of Manufacturing Prices via the other ISM report came in negative too. Traders of the USD/BRL may find yesterday’s upwards momentum in the currency pair rather suspicious, because of the weaker than anticipated U.S data and the strong price action.
USD/BRL has been Polite but Volatility may Suddenly Develop Near-Term
- Speculators of the USD/BRL have likely gotten used to rather tranquil Forex conditions in the currency pair. Yesterday’s price action however was rather fast-paced and as the USD/BRL closed the values higher were sustained.
- Because of job numbers being published later this week in the U.S., including the Non-Farm Employment Change and Average Hourly Earnings, speculators should brace for the potential of more sudden volatility to develop in the USD/BRL.
- Financial institutions have turned in rather nervous results across Forex the past three trading sessions and this may continue to creep into the USD/BRL in the near term.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.8050
Current Support: 4.7675
High Target: 4.8350
Low Target: 4.7380
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