Day traders looking for the next round of impetus in the USD/BRL have rather sideways broad Forex market action to glance at as of this morning. The currency pair closed yesterday’s trading near the 4.9758 ratio, this depending on the trading platform one looks at and based on bids and asks. The USD/BRL is within the middle of its five day trading range.
Last week’s trading action on Thursday hit a low around 4.9390 and then within about a five hours span was back above the 5.0200 mark for a moment. Last Friday’s trading started with a gap lower, some choppiness higher, but eventually went into the weekend near the 4.9785 realm, which is quite close to yesterday’s close on Tuesday.
Equilibrium Maybe, But a Wait and See Approach Likely
The ability of the USD/BRL to remain below the 5.0000 is worth noting, yesterday’s high did touch the 5.0100 plus vicinity before seeing some velocity downwards again. Speculators who enjoy the USD/BRL know it is a rather lightly traded market, but one that can provide enough movement to make opportunities stand out when momentum is found.
The USD/BRL remains within the lower tier of its long-term range. Cautious trading has been seen in the broad Forex market the past handful of days, this as financial institutions seem to be taking a wait and see approach – this as they try to define what their outlooks are as they interpret the economic winds being created via sentiment being generated from the Iranian war. While some may see the current price action in the USD/BRL as equilibrium technically, traders should brace for possible volatility.
Federal Reserve Pronouncements Later Today
Traders may want to take into account that the U.S Federal Reserve will be releasing its interest rate policy later today. But the Fed will not be making a change to the Federal Funds Rate, and it will definitely sound cautious about its outlook.
The Fed like every other global financial institution needs to see hard data regarding cause and effect regarding the higher energy prices and the inflation it sprouts.
The USD/BRL will remain, like the broad Forex market, focused on behavioral sentiment being generated from the Middle East.
It is becoming clear that the Iran war is now focused on an economic factor as the U.S applies pressure in the Strait of Hormuz.
Higher energy costs may factor into support staying durable in the USD/BRL.
A price range has certainly been practiced, but the 4.9660 level should be looked at as intriguing support near-term until proven otherwise.
Brazilian Real Short Term Outlook:
Current Resistance: 4.9820
Current Support: 4.9710
High Target: 5.0230
Low Target: 4.9650