The USD/BRL closed near the 5.2228 mark on Friday which saw some selling develop late in the day, this before the start of the long holiday Brazil is now observing and celebrating. The start of the Carnival in Brazil can be compared to the current state of the global markets which are practicing a complex form of behavioral sentiment. Friday’s trading results left the USD/BRL still within the upper tier of its near-term price range, but still within lower long-term technical charts via perspective.
When the USD/BRL begins to trade after the Ash Wednesday observation, the currency pair may find that it was beneficial to be shuttered during the holidays, this as global markets continue to demonstrate a rather defensive (cautious) stance. The USD centric weakness which has been strong in Forex has seen some headwinds develop the past couple of days.
Interpretations and Reactions in Forex and the USD/BRL
Friday’s reaction in the USD/BRL mirrored other major currency pairs. The weaker than anticipated U.S inflation numbers did not cause a massive reaction in the broad markets, nor in Forex. The lack of reaction may indicate financial institutions remain cautious as they seem to wait for influence to develop from something they cannot grasp easily – and that is optimism. U.S major equity indices are producing cautious results and has caused widespread headwinds.
The USD/BRL has been within a solid bearish trend. Friday’s slight selling after its high for the week was touched only hours beforehand might indicate a belief in Brazilian financial institutions the currency pair was in overbought territory. The selling took the USD/BRL back to within sight of the 5.2100 framework, but distance enough away to potentially set the table for attempts at selling after the holidays in Brazil conclude.
Near-Term USD/BRL Monitoring
Day traders now have the benefit of being able to watch Forex trading in the broad markets until the USD/BRL opens again and this may sooth nervous speculators.
- The USD has seen some incremental buying, but the momentum has not been super strong.
- One of the linchpins in the broad marketplace continues to be the results in U.S equities which may produce some risk adverse attitudes, but this in reality may not affect the USD/BRL too much.
- The currency pair has been traversing lower.
- If the broad Forex market starts to see USD weakness build again over the next day, this will lead to a USD/BRL choppy opening as positions get transacted, but perhaps one that will lead to the currency pair trying to test lower realms again as the week concludes.
Brazilian Real Short Term Outlook:
Current Resistance: 5.2340
Current Support: 5.2180
High Target: 5.2510
Low Target: 5.1900