The USD/BRL closed yesterday’s trading near the 4.8665 vicinity which was slightly below the high reached of nearly 4.8755 a handful of hours before. The past week of trading in the USD/BRL has seen the currency pair find momentum lower, but also highlight a rather consolidated price mode. After falling below the 4.9000 level on Thursday of last week, the USD/BRL has sustained lower prices.
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As the USD/BRL opens today traders will need to brace for the potential of gaps, not only because it is a natural occurrence for the Forex pair, but also because the U.S Federal Reserve will announce its FOMC Statement later in the day which will add potential fireworks to the trading landscape. Financial institutions may feel pressured to position early if they feel they need to protect large positions that are in question before the U.S. Feds pronouncements.
USD/BRL Track Lower is Intriguing and Correlates to Broad Forex Market
The USD/BRL has correlated to other major currency pairs mostly, but it has also produced more bearishness than some other currencies teamed against the USD in recent trading. The move lower to 4.8395 on Monday which was a one-month low, was not able to be sustained and since then has seen an incremental rise in value for the USD/BRL.
However, rather polite trading has continued the past few days as the lower price range has been tested, gently allowing traders using solid risk management to take profit and stop loss orders some comfort. However, today’s Fed monetary policy announcements could cause some volatility and break the USD/BRL out of its tight near-term price range.
USD/BRL Resistance of 4.9000 is Intriguing
- The Federal Reserve is not expected to raise interest rates today, but they are anticipated to sound rather aggressive and threaten the potential for an increase next month to the Federal Funds Rate.
- Early volatility as the Fed speaks will create choppy conditions possible in the USD/BRL, and traders who want to pursue the currency pair are highly encouraged to use entry orders to make sure they get a reasonable price fill when starting a trade.
- If the Federal Reserve doesn’t raise rates today and does threaten to hike next month, the USD/BRL eventually could settle down and start to test lower values again.
- However, traders should expect a wider price range to be seen in the wake of the Fed’s FOMC Statement.
Brazilian Real Short-Term Outlook:
Current Resistance: 4.8695
Current Support: 4.8610
High Target: 4.9060
Low Target: 4.8390
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