The USD/BRL managed to create new lows by the close of yesterday’s trading, the currency pair is now traversing values seen at the end of November 2024.
The USD/BRL closed near the 5.8065 ratio per yesterday’s closing. The ability of the USD/BRL to close lower is a solid accomplishment for the Brazilian Real, particularly when global sentiment in Forex was extremely nervous yesterday. The USD/BRL did jump higher in early trading yesterday, touching the 5.9050 vicinity briefly.
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But by the time the USD/BRL opened and after the nervous buy orders were executed, news from afar regarding the U.S and potential tariff implementation in Canada and Mexico had already started to show signs of calm. This allowed the USD/BRL to selloff incrementally as the day progressed. Yes, there were some moments of volatility, but by the end of yesterday’s trading the USD/BRL was trading near lows seen in the last week of November 2024.
Higher Price Range and Near-Term Speculation
The USD/BRL has been able to provide a rather solid bearish trend since late December when the 6.20000 level was being challenged. The past month of trading has continued to show that financial institutions are becoming more calm regarding Brazil’s ability to navigate its business relationship with the U.S. Yes, the USD/BRL still remains in elevated long-term price realms, but the lower month long trend in the currency pair has been consistent.
Forex is more tranquil globally early this morning. Financial institutions have been given some comfort because of the negotiated delay of potential tariff implementation to Canada and Mexico. This shows there is a chance to find agreement with the current White House administration. However, it doesn’t mean everyday will be sunshine. The USD/BRL is now trading near important support.
USD/BRL Near 5.8000 is Important
Behavioral sentiment in the USD/BRL is vitally important. The ability of the USD/BRL to flirt with the 5.8000 ratio will now be tested. Mid-term technical charts show the USD/BRL trading between the 5.5000 and 5.8000 levels rather consistently from mid-August to late November 2024.
- Technical traders will now be confronted with a mix of speculative support levels they may want to target if they believe the bearish trend will be continued in the near-term.
- Plenty of reasons to remain nervous about the Brazilian Real remain factors, including Lula da Silva’s fiscal polices and relationship with President Trump, but for the moment some tranquility has been found.
- If traders want to pursue lower depths in the USD/BRL near-term they should protect their wagers with effective stop losses in case sudden buying develops.
Brazilian Real Short Term Outlook:
Current Resistance: 5.8120
Current Support: 5.8000
High Target: 5.8450
Low Target: 5.7880
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