The USD/BRL closed near the 5.3972 ratio via yesterday’s trading, this as the currency pair produced a gap higher early, but then demonstrated resistance around the 5.4000 level appears important.
Yesterday’s trading in the USD/BRL produced a rather intriguing Forex spectacle. The USD/BRL saw a gap higher upon opening, this after closing on Monday near the 5.3580. Starting yesterday’s trading near the 5.3850 mark, the close around 5.3972 now should be watched when the USD/BRL opens today’s Forex action.
While the currency pair has climbed higher in the short-term, the USD/BRL essentially closed on Tuesday near values it traversed on Friday. The USD has seen strength build within the broad Forex market since the middle of September when the U.S Dollar Index is studied, but the USD/BRL while certainly moving higher during this timeframe has been able to maintain a known range since the 20th of October that is rather curious compared to other major currencies versus the USD.
Short-Term Nervousness and Technical Charts
Resistance around the 5.4000 the past couple of weeks has proven durable in the USD/BRL. Will this continue or will the resistance level be penetrated and allow for a test to ensue near the 5.5000 mark again? Risk adverse trading grew in the broad financial markets yesterday as equity indices proved nervous. The U.S Federal Reserve’s choice to offer no clarity regarding its interest rate outlook for December has caused financial markets some concern.
The notion that record values in stock indices are over valued has caused headwinds too recently. However, short-term nervousness sometimes has the ability to disappear quickly. The belief among some USD/BRL traders that the currency pair may produce a reversal lower may have some logic, but guessing the timeframe in which that occurs could be dangerous. Day traders should look at the 5.4000 region carefully.
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5.5000 a Realm Too High and Too Ambitious?
Today’s opening in the USD/BRL will prove worthwhile to monitor. If the currency pair suddenly finds itself sustaining highs above the 5.4000 mark, then it may signal financial institutions are ready to allow for higher realms to be explored in the near-term.
- Risk management is always essential, and considering the current nervousness in the global markets it must be urged for today and the remainder of this week.
- The USD/BRL while producing gaps the past handful of days consistently has also been able to trade within a known speculative range.
- Considering the amount of nervousness in the broad Forex markets, it seems unlikely the USD/BRL will be able to maintain a price range that doesn’t see a challenge higher above current resistance.
- However, if the broad Forex market does start to show signs of believing the USD is overbought, the USD/BRL may start to produce a reversal lower that gains some momentum.
- Traders should anticipate volatility near-term from the USD/BRL.
Brazilian Real Short Term Outlook:
Current Resistance: 5.4020
Current Support: 5.3820
High Target: 5.4685
Low Target: 5.3590
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