The USD/BRL closed Monday’s session around 5.7785, as support near the 5.7000 level clearly proved it may remains rather durable. On Friday the USD/BRL did climb above 5.7200, yesterday’s trading did see a move lower on the open, but then buying ensued.
Financial institutions have a few nervous considerations regarding their outlook for the USD/BRL over the mid-term, which has seemed to spark reactions causing choppiness and yesterday’s upwards momentum. Perhaps some folks simply believe the USD/BRL had been oversold based on the fiscal prospects of Lula da Silva’s fiscal policies. But also, there are likely concerns about political stability in Brazil due to the ongoing recriminations being argued by opposing political spheres. However,important and a speculative consideration, there is the possibility the USD/BRL simply has gone a little higher due to risk adverse USD centric buying as U.S equities show signs of nervousness.
VAT last week. And not to be outdone regarding detrimental news, loadshedding once again started in South Africa this past weekend.
Support Level Holds and Reversal Now Watched
Today’s opening in the USD/BRL should be monitored by traders. The USD/BRL is back within sight of the 5.8000 level, which is a ratio that it spent late October 2024 until the second week of February essentially trading above. Financial institutions in Brazil certainly have important considerations regarding mid-term outlook as they try to find a balance between domestic concerns and the potential of too much attention from the Trump administration.
The combination of Brazilian economic misgivings regarding fiscal policy and the potential of Trump suddenly directing rhetoric regarding possible tariffs towards Brazil, could continue to create rather durable support levels in the USD/BRL. Some traders may believe that moves lower are legitimate opportunites to consider looking for reversals higher, so the 5.7300 to 5.7000 levels may continue ignite buying in the USD/BRL.
Resistance Levels and USD/BRL Higher Realms
Now resistance levels need to be watched, if there is a gap higher this morning, this could be a troubling sign for the Brazilian Real. However, the USD/BRL has been within a rather steady bearish cycle since the middle of December. Perhaps one day of reversals higher actually represents the opportunity to sell the USD/BRL and look for lower values once again.
- If resistance proves durable today and a move lower starts to be generated, perhaps it will prove financial institutions remain calm and Friday and yesterday’s upwards momentum was a temporary glitch.
- Technical traders may believe the 5.7000 to 5.8000 price range will get a consistent test in the coming days.
- Day traders should be careful early with the USD/BRL because there appears to be signs of fragile sentiment.
Brazilian Real Short Term Outlook:
- Current Resistance: 5.7825
- Current Support: 5.7730
- High Target: 5.8190
- Low Target: 5.7490
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