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This currency pair has maintained a steady trading range, and this has come amidst yesterday’s U.S Federal Reserve interest rate hike and growing speculative positioning by Brazilian financial institutions as the Brazil’s national election comes into view. The USD/BRL shows upwards momentum on Monday when the broad Forex market and global investors reacted to additional concerns coming from the Middle East but simply put the currency pair has been able to correlate to other major currencies and yesterday’s late price action showed no bizarre bursts.
USD/BRL Holds Its Range After the Fed Decision
When trading in the USD/BRL opens today there will be some late reactions perhaps from financial institutions and large players that could not participate in yesterday’s results, but the hike of .25% from the U.S Federal Reserve had been expected yesterday. The highs achieved yesterday in the USD/BRL produced a reversal lower in the later hours signaling that financial institutions clearly thought the currency pair had been overbought leading up to the Fed drama.
The current price levels of the USD/BRL have been traversing a known realm and hinting that values are seen as fair. Short and near-term traders may feel comfortable within the current levels being demonstrated, nonetheless they might want to allow the opening today to demonstrate itself for the first fifteen to thirty minutes in to gauge existing sentiment.
Why USD/BRL Has Returned to a Familiar Trading Range
The volatility seen in the USD/BRL in the past month and a half has returned to a calmer air. The highs seen could obviously be challenged again, but current conditions and yesterday’s close near 5.1470 will be looked upon as a rather untroubling result. The highs that peaked yesterday around 5.1675 also stayed below Monday’s apex values which touched the 5.1820 vicinity. Reactions early this week to an escalation of tensions in the Middle East via concerns about Crude Oil supply from Saudi Arabia certainly still could happen again, but worries for the moment seem to have been digested.
The Iranian situation is far from solved, but financial institutions at this juncture may be more focused on risk appetite via U.S Federal Reserve outlooks and the Brazilian election which is fast approaching. Short and near-term speculators have an opportunity to test the current equilibrium today and tomorrow. If developing news from the Middle East can remain at a comfortable boil, the USD/BRL may find itself testing Brazil financial institutions outlooks combined with standard price pressures via commercial transactions.
Recent Selling Pressure Limits the Case for Further USD/BRL Gains
Brazilian financial institutions have shown their experience levels are solid and have managed to correlate existing conditions into the USD/BRL without a lot of volatility. Yes, price velocity can be seen but the impact of yesterday’s Federal Reserve move did not cause a massive shift. Early price action in the broad Forex market today has shown additional USD centric strength flourish and day traders may be cautious because of these results.
Looking for some upside price action the USD/BRL may feel logical, but Monday’s highs and yesterday’s attempted bullish tracks may prove to be resistance levels technically that see more pushback. Having touched higher territory in recent weeks and the rather strong demonstration of selling pressure afterwards may show Brazilian financial institutions have positioned themselves well for the near-term. Tests are certainly coming of the existing price realm, but it will likely hold onto known values.
USD/BRL Price Chart: Hinting at Key Levels
Brazil’s Election Becomes the Next USD/BRL Focus
Current conditions in the broad market remain potentially dynamic. However, yesterday’s Federal Reserve interest rate hike may have created a pathway for financial institutions to position themselves ahead of the public announcement and then react with selling after outlooks were confirmed. Today’s opening in the USD/BRL will prove worthwhile to watch for small traders because it is likely to express some early pressure points and then could produce a rather durable range afterwards. Now that the Fed decision is out of the way, financial institutions in Brazil will start focusing more on the upcoming election season which might create cautious ranges in play for wagers by speculators.
Levels to Watch in USD/BRL
The market’s ability to remain near its recent range is likely to keep attention on the nearby 5.1560 resistance and 5.1430 support areas. A move beyond either boundary may reveal whether post-Fed stability is becoming more durable or whether broader dollar sentiment and Brazil-specific uncertainty are beginning to exert greater influence. The wider areas near 5.1810 and 5.1280 provide context for how far the pair could travel if the current balance gives way.
Global Risk Sentiment Could Test USD/BRL’s Current Stability
Short and near-term trading in the USD/BRL leading into the weekend will now rely on existing risk sentiment via global markets. USD strength which has developed over the past handful of days may remain evident, but there is a definite chance that financial institutions that had braced for an interest rate hike from the Federal Reserve could turn more aggressive now that policy has become somewhat clearer. Which sets the stage for reactions in the USD/BRL which will correlate to broad Forex sentiment.
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