The USD/BRL closed near the 5.8100 ratio yesterday and as trading opens this morning the consideration the currency pair is within a rather known price range may prove tempting.
After opening following the long Carnival holiday in Brazil late last week the USD/BRL fell quickly from around the 5.8800 vicinity to the 5.8500 mark with a gap, then from there the currency pair extended its selling pressure until the 5.7400 level became durable support. Friday’s trading saw buying and the USD/BRL was challenging the 5.8000 level going into the weekend.
Trading early this week saw the USD/BRL move higher on Monday when the 5.8750 vicinity was touched, but yesterday’s price action produced selling where the 5.8000 ratio was again a target. And we will start today’s trading within this known value range and the U.S inflation numbers also about to be publish via the Consumer Price Index.
Known Range Proving Durable in the USD/BRL
While many other major currencies have gained rather well against the USD in the past few week, the same cannot be genuinely said about the Brazilian Real. Yes, there is certainly a correlation to the USD/BRL with global Forex, but there are enough outliers to demonstrate the currency pair sometimes acts on its own. The temptation to believe the price range of the USD/BRL will remain in a known equilibrium may prove alluring to some technical speculators.
Emerging market currencies like the Brazilian Real and South African Rand should be watched in correlation to the USD. Both Brazil and South Africa have concerns which cause unease in financial institutions and both nations also have governments the current U.S White House administration does not look favorably upon it sometimes seems to observers. Yet, the currency pairs are healthy enough to mimic the broad market frequently. The 5.8000 mark upon opening today in the USD/BRL should be watched intently as a barometer.
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Behavioral Sentiment in the USD/BRL as a Factor
The USD/BRL was able to challenge and go beneath the 5.7000 ratio in the third week of February, and perhaps some bearish traders may believe looking for those lower targets is worthwhile. However, aiming for more realistic and close lower prices in the USD/BRL may prove the wise decision in the near-term.
Traders who are confident about direction should not get overly ambitious.
Because even if they are correct about a trend there is guaranteed to be plenty of volatility while trying to get there, especially when leverage is being used.
Resistance will prove intriguing today and tomorrow in the USD/BRL. If the 5.8200 to 5.8300 levels are sustained as higher elements, this might signal some selling momentum could be seen in the USD/BRL near-term.
Brazilian Real Short Term Outlook:
Current Resistance: 5.81900
Current Support: 5.8000
High Target: 5.83100
Low Target: 5.7760
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