The USD/BRL ended yesterday’s trading near the 5.3754 ratio, this as its price range continues to exhibit an ability to remain durable even as global financial markets display signs of nervousness.
The USD/BRL closed around the 5.3754 mark on Tuesday and remained within a well-practiced realm, this as traders prove they are seemingly comfortable with the existing price realms which has been rather consistent since late in the first week of January. The ability of the USD/BRL to remain tranquil is rather noticeable compared to volatility which has been seen in other major currencies versus the USD.
The U.S had a long holiday weekend, so yesterday’s trading in the USD/BRL could have proven to be choppy, but instead delivered a range that largely remained within the 5.3500 to 5.4000 sphere with some brief outliers. Financial markets globally are nervous because of noise coming from various news fronts. President Trump will be speaking in Davos, Switzerland today – this is a big event.
Avoiding Market Volatility in the USD/BRL
The USD/BRL does have a tendency to gap upon its opening. Today may be one of those days in which speculators will have to be doubly careful about early conditions in the currency pair. President Trump will be speaking in a handful of hours and while he is at the podium in Davos, the USD/BRL will likely be opening for trading. If President Trump delivers a calm speech this would help global markets trade in a calmer fashion and may help the USD/BRL remain in a tranquil price range.
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However, if President Trump suddenly starts to ramp up his rhetoric today regarding subjects dear to his heart like Greenland, tariffs, the Federal Reserve and other talking points such as Iran and China, then the marketplace could get volatile. Yesterday’s results on U.S equity indices shows financial institutions are nervous. Remarkably the USD/BRL did trade in a known range, but will this remain the story?
Potential Near-Term Pratfalls for the USD/BRL
If risk adverse conditions heighten today because of surprises coming from President Trump’s talking points, this could affect the USD/BRL. Yet, day traders have been given an opportunity over the past week and half to use resistance levels to sell the USD/BRL. Will the price range hold?
- Caution may be appropriate early today while judging market conditions as Trump speaks in Davos.
- If his speech ends calmly and U.S equity indices do not show significant signs of duress, perhaps the USD/BRL will turn in another day of equilibrium and lower values.
- However, if President Trump creates more nervous tension in the financial markets, then perhaps a sudden momentary move higher in the USD/BRL may take place.
- Speculators would be wise to watch the opening of the USD/BRL, and judge reactions via Trump’s address in Davos before positioning themselves.
Brazilian Real Short Term Outlook:
Current Resistance: 5.3810
Current Support: 5.3710
High Target: 5.4190
Low Target: 5.3480
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