- Having closed yesterday’s near the 4.9565 mark, which essentially was around lows that occurred earlier on Monday near the 4.9515 ratio; the USD/BRL is testing near-term technical depths.
- The volatility in the broad Forex market has been widespread and it has affected the USD/BRL, but the currency pair has correlated well to global conditions.
The past few months of trading in the USD/BRL may have appeared quite volatile to a speculative trader, but from a broader perspective the price range of the currency pair has largely been between the 4.8500 and 4.9800 ratios with outliers. Day to day price action in the USD/BRL definitely produces choppiness, but in relation to the broad Forex market the trading within the currency pair has been rather tranquil, depending on the amount of leverage a speculator is using.
Yesterday’s USD/BRL Trading was Light
Because of the U.S holiday yesterday the USD/BRL experienced lighter than normal price action, that will change today and financial institutions returning back to their offices may cause some momentary excitement upon the currency pair opening. Having finished yesterday’s trading within the lower elements of its price range; support levels should be watched carefully today.
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The 4.9500 ratio will prove to be an important barometer for short-term traders, the last time the USD/BRL sustained prices below this level was from the middle of January until the first week of February. Trading below the 4.9500 ratio at this moment would be rather intriguing, this because global behavioral sentiment has turned cautious and a retest of mid-term support levels a potential sign that USD/BRL speculators continue to lean towards a weaker USD. But traders should not get overly ambitious regarding a solid downward trend in the near-term.
Short-Term Sentiment and U.S Economic Data
Because of yesterday’s holiday, which meant volumes in the USD/BRL were low, and the notion that U.S economic data will be relatively light this week, traders will have to consider short-term perceptions based on current market sentiment. Technically the ability to traverse lower yesterday may be put to a test early today by the return of U.S financial institutions. If the USD/BRL is able to keep the 4.9560 ratio in sight early today and show a tendency to move lower, this would be interesting. However, some speculators may be tempted to look for some quick upside price action too with reversals in mind.
- Support levels should be watched today to see if they prove durable. If the 4.9550 mark is not penetrated it may be a sign for short-term speculators to look for quick hitting bets that target resistance.
- Traders should be ready for a rather tight range to be maintained near-term in the USD/BRL and technical considerations to remain a key ingredient as behavioral sentiment remains cautious.
Brazilian Real Short Term Outlook:
Current Resistance: 4.9620
Current Support: 4.9530
High Target: 4.9760
Low Target: 4.9490
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