USD/BRL day traders will get fast results when the currency pair opens today after a long holiday weekend, there has been no trading of the Brazilian Real since Thursday of last week.
The USD/BRL tested the 5.8000 ratio much of last Thursday before going into the weekend with quotes displaying the 5.8065 vicinity. Now that a long four day stretch of holidays has ended, the USD/BRL will certainly produce a gap upon its opening and anyone brave enough to keep an open position going into today’s Forex start in a few hours will be delivered volatility.
The USD/BRL has been able to fight off its highs seen on the 10th of April when the 5.9600 ratio was challenged. The lower trend however up until now remains above values seen in late March and early April, this when the USD/BRL was traversing lower prices. And this is where it gets interesting and wagers by speculators may grow. The USD/BRL within its current trading ground looks overvalued compared to many other emerging market currency pairs technically.
A Slight Selloff but Higher Price Range Remains
Even though the USD/BRL has traded lower in the past week and a half, it remains within the higher elements of its price range. Even the South African Rand that had seen risk premium factored into the USD/ZAR has sold off recently in a stronger fashion. Yes, financial institutions in Brazil have reasons to be concerned regarding the U.S White House and Brazil, but there is a chance upon today’s opening the USD/BRL may react to what some view as a currency pair price that is still too costly.
Dynamic nervousness abounds in the global marketplace. Complex factors are being seen which are causing rather intriguing prices in assets like gold, U.S equity indices and Crude Oil – which are all showing signs of risk adverse considerations. The USD/BRL doesn’t have a lot of volume, but it is an important part of global trade, and its price action will be worth a look by traders who simply want to use the currency pair as a barometer regarding sentiment.
Near-Term Volatility Should be Expected
Having been shuttered for four full days leaves the USD/BRL open to a spike early today. The question is which direction the currency pair will move upon its opening and what will happen as financial institutions judge values and decide what fair equilibrium is after the four days that have passed without being able to trade the USD/BRL.
- USD centric weakness has been strong in Forex and there is a notion perhaps for speculative wagers to believe downside will develop in the USD/BRL.
- Having not been able to sustain prices below the 5.8000 level going into this past weekend was likely a cautious move by large players, but perhaps they know something others do not.
- Near-term volatility will certainly be strong, today and tomorrow are likely to be rather challenging in the USD/BRL.
- Will large financial institutions aim for lower marks like the 5.7500 to 5.7000?
Brazilian Real Short Term Outlook:
Current Resistance: 5.8210
Current Support: 5.7980
High Target: 5.8450
Low Target: 5.7350
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