The USD/BRL has proven to be able to hold onto its lower realm and finished yesterday’s trading near the 4.9669 ratio. The ability to move within its long-term lower realms is noteworthy and shows financial institutions in Brazil and elsewhere have a solid outlook for the Brazilian Real. However, the correlation to the broad Forex market remains as USD centric weakness has prevailed in the past few weeks as large players have become accustomed to rather anxious shadows lurking.
However, day traders still have plenty of opportunity to ride waves caused by emotions. The problem for USD/BRL traders is that a lot of the market action happens as the currency pair opens because of the limited hours the USD/BRL trades. And this results in financial institutions creating rather vibrant and volatile openings in the USD/BRL, which smaller traders often miss.
Below 5.0000 A Barometer for the USD/BRL
Having been able to sustain values below 5.0000 in the USD/BRL since last Friday is a strong indication that large players are still leaning into outlooks that are positive for the Brazilian Real. But early trading in the broad Forex market this morning has seen the USD pick up some strength. Perhaps this is due to the growing anxiousness about the ceasefire between Iran and the U.S showing fragile signs. The price of WTI Crude Oil has moved up and towards the 93.000 mark and should be watched.
The USD/BRL below 5.0000 and its capable price action demonstrated downward over the past months and year needs to be taken seriously by speculators. The USD/BRL is traversing well below its value seen on the 27th of February when it was near the 5.1275 juncture. Having reestablished the pre-war value on the 8th of April – after the Iranian ceasefire was announced – per the opening for the USD/BRL is important and shows that financial institutions sentiment is a key.
Near-Term Betting and the Coming Weekend
Day traders may want to venture into lower USD/BRL wagers, but they need to be careful. Strong price velocity lower is likely not going to happen.
Current conditions in the Middle East remain tense.
Today’s opening for the USD/BRL will reflect current sentiment, and the stronger USD centric action in the broad market may lead to early buying.
But what happens half an hour after the opening in the USD/BRL will hold the key.
Rhetoric from the U.S White House and Iran is going to continue.
The ceasefire has been extended, but large traders are nervous about what will happen in the near-term and over the weekend.
Brazilian Real Short Term Outlook:
Current Resistance: 4.9700
Current Support: 4.9620
High Target: 4.9940
Low Target: 4.9450