Cautious buying has overtaken the USD/BRL in the past few days, this as the currency pair went into the weekend near the 5.7585 vicinity after experiencing lows beneath 5.7000 on Tuesday of last week.
The opening of the USD/BRL will be intriguing today, this after a weekend for financial institutions to consider their outlooks. The specter of U.S tariffs has caused nervousness to seep into the broad Forex markets the past handful of days. The USD had been weaker in many instances over the past few weeks, but nervousness has again infiltrated the mindsets of financial institutions again as they prepare for tariff deadlines on the 2nd of April.
For the moment Brazil has stayed out of the direct focal point of the Trump administration, but the USD/BRL is correlating to the broad Forex market which is showing definite signs of anxious outcomes. The USD/BRL was able to trade below the 5.7000 mark last Tuesday and flirted with the 5.6800 vicinity and slightly lower. However, like the broad Forex market the USD/BRL began to see buying of the USD increase as the week progressed.
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USD/BRL Technical Glances and Perspectives
A one month technical chart of the USD/BRL shows the currency pair has returned to the middle of its price range. However, a look at three month chart clearly shows bearishness. A look at a six month chart though shows the USD/BRL is trading near values seen in the third week of November. Meaning this also illustrates that financial institutions are playing it safe regarding their outlooks and waiting for tangible results via tariff negotiations.
Today and tomorrow are likely to see volatility in the broad Forex market. How this will be expressed in the USD/BRL is questionable and traders should anticipate the likelihood of a gap upon the opening of the currency pair today. Behavioral sentiment will be reactionary and although there is not a great deal of volume in the USD/BRL, traders should be prepared for sudden velocity to be produced.
Near-Term Speculation in the USD/BRL and Risk Taking
Brazil and the U.S are large trading partners. The shadow of tariffs and the implications that other nations absorb via changes to White House policy will certainly concern Brazilian financial institutions. The higher movement in the USD/BRL seen last week was done in a correlated manner, and the currency pair will likely act in an integrated manner near-term.
- Risk adverse trading is certainly going to be seen in the short-term, but it may be choppy.
- Traders who want to pursue the USD/BRL over the next three days need to understand market conditions will be tense, risk management will be crucial.
Brazilian Real Short Term Outlook:
Current Resistance: 5.7710
Current Support: 5.7520
High Target: 5.7950
Low Target: 5.7240
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