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USD/BRL Analysis: Higher Values and More Volatility Coming Short-Term

The USD/BRL will begin its trading today near values last seen in late October of 2023; the currency pair has mirrored volatile conditions in Forex as nervousness builds.

  • Traders who do not have open positions in the USD/BRL today as Forex begins may count themselves as lucky.
  • Volatility is likely to be seen when the USD/BRL starts trading, this as the currency pair is perched at highs not traversed since late October of 2023.
  • A gap upon the opening of the USD/BRL is almost certain to be seen as full volumes come into the currency pair after the long holiday weekend.

USD/BRL Analysis Today- 02/04: USD/BRL Volatile Rise (Graph)

The USD/BRL is currently marked near the 5.0546 ratio and traders who want to pursue the currency pair are best advised to allow the first hour to go by before entering the wagering pool. Behavioral sentiment across Forex remains nervous because of stronger than anticipated U.S economic data which has made the USD stronger across the board the past week. The upwards momentum of the USD/BRL mirrors results seen in many major currency pairs.

Momentum Higher and Questions about Resistance in the USD/BRL

Many speculators may believe the USD/BRL has been overbought, but timing the exact moment a sustained movement lower is going to emerge is a dangerous task. The opening in the USD/BRL is likely to prove volatile and reactive, considering the notion that many large players were not active during the long holiday weekend. The USD/BRL may look overbought, but the currency pair has traded higher and if the 5.0500 level is sustained this could signal nervousness remains and may be setting the stage for another leg up. The 5.0600 to 5.0900 ratios could become reality over the near-term.

Employment data from the U.S will come all week long, climaxing on Friday with the Non-Farm Employment Change and Average Hourly Earnings. If these numbers come in stronger than anticipated this could cause more USD bullish behavior to be seen in Forex. Until this Friday’s data is released, the USD/BRL is likely to see choppiness which tests the current price range. However, if the currency pair remains around its current highs it sets the table for volatile conditions later this week which may create a wide price range.

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    Bearish Traders Should be Cautious in The USD/BRL

    Technical traders who have bearish perspectives because of the price velocity upwards in the USD/BRL seen the past handful of days should not get overly ambitious. Support for the USD/BRL has proved rather strong near the 4.9800 ratio, betting on downside momentum penetrating this low could be very difficult.

    • And in the short-term actually hitting the 5.0000 mark may seem like quite a test for sellers.
    • The opening in the USD/BRL will be fast and active traders need to use their risk taking tactics effectively.  Quick hitting bets are encouraged for day traders.

    Brazilian Real Short Term Outlook:

    Current Resistance:  5.0600

    Current Support:  5.0410

    High Target: 5.0850

    Low Target:  4.9950

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    Robert Petrucci
    About Robert Petrucci
    Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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