The USD/BRL saw another climb in value yesterday, which correlated to the broad Forex market; the currency pair is now testing long-term highs.
- The USD/BRL closed near the 5.1875 mark yesterday. Friday’s trading concluded around the 5.1150 mark.
- The upwards track of the USD/BRL likely has some in Brazil nervous, but the bullish momentum being displayed in the currency pair mirrors the global Forex market as the USD has gained strength.
- On April the 10th the USD/BRL was trading slightly below the 5.0000 level. Yesterday’s high was above the 5.2100 level momentarily.
The reason for the move higher is a USD centric influence. U.S inflation data proved stronger than expected last week. And yesterday’s Retail Sales statistics added fuel onto the notion the U.S Federal Reserve will not be able to cut its Federal Funds Rate anytime soon. Inflation in Brazil has been stubborn also but seemingly under control, the USD/BRL however is moving according to the acknowledgement interest rates are not likely going to be changed in the U.S.
Growth in Brazil Remain Steady but the USD/BRL is Testing Long-Term Values
While Brazil has maintained steady growth under its current leadership and inflation remains relatively tame, the USD/BRL is now testing values last seen briefly in the first week of October 2023. If the current higher values are sustained in the USD/BRL, putting aside the brief spikes higher seen in September and October of 2023, the last time the currency pair has traversed its current value range in a steady fashion was from January to March 2023.
Technical traders who believe the USD/BRL is overbought need to consider that financial institutions have shifted their outlooks regarding U.S interest rate cut potential. The possibility that the Fed will have to remain cautious into the late summer of 2024 is having an effect on the thinking of traders. The question short-term speculators need to watch out for is if the USD/BRL sustains its current values, if this happens over the next couple of days this will create speculative intrigue.
USD/BRL Upwards Path and Resistance in Question
The ability of the USD/BRL to march higher has not been achieved on its own, the currency pair is correlating to the broad Forex market, and traders need to keep their eyes on USD centric notions. Resistance levels may look tempting as places to look for reversals, but speculators should be very cautious.
- The U.S will not release a lot of economic data this week going forward that will be ultra-significant, meaning behavioral sentiment may remain nervous.
- Weekly jobs numbers will come from the U.S on Thursday, but unless there is a major surprise, the USD/BRL is likely to remain choppy in the near-term and until the end of this week.
Brazilian Real Short Term Outlook:
Current Resistance: 5.1990
Current Support: 5.1820
High Target: 5.2210
Low Target: 5.1690
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