The past week of trading in the USD/BRL has produced a largely correlated set of results with the broad Forex market. Speculators saw the currency pair reach for its higher terrain one week ago, only to be pushed back to lower values. The looming election in Brazil in the first week of October with a runoff vote towards the end of that month is certainly adding to caution, but a lot of the firepower (or lack of it actually) is occurring because financial institutions are also tentative regarding their outlooks regarding U.S interest rates. This leaves the door able to be entered by retail traders who are brave enough to wager on near-term perspectives.
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USD/BRL Range Holds as Brazil Election Risk Builds
The reversals seen in the USD/BRL over the past month of trading have been technically efficient, but what may be interesting for speculators is that while USD centric weakness in the broad market has been widespread with sustained lows, the Brazilian Real remains above its lowest USD/BRL results. While the currency pair floats in a known range, cautious signals from financial institutions are clear because in May and June of this year the USD/BRL was noticeably lower. Meaning that current USD centric price action which has developed against other major currencies has not repeated in the Brazilian Real. This highlights that financial institutions are not only worried about current U.S Fed implications, but are considering the potential different outcomes of the Brazilian elections in a little more than one month’s time.
Jackson Hole and Fed Signals Shape USD/BRL Outlook
While the U.S will be conducting the Fed’s Jackson Hole Symposium today and into tomorrow, the role of Brazil’s Central Bank is not highlighted at the event. Financial institutions will monitor the conference to see if there are any major announcements which would deliver further clarity regarding U.S interest rates and tomorrow’s speech from Kevin Warsh will be listened to carefully.
However, day traders can clearly see the USD/BRL is near the 5.1486 mark and closed yesterday’s session in the lower rungs of its value, but has not displayed much tendency to traverse past a depth of 5.1400 recently. The last time the USD/BRL sustained lower realms was on the 10th of August when the 5.1000 ratio was being flirted upon. Speculators guard against attitudes seeking velocity and those who believe the USD/BRL needs to go lower should remain cautious until financial institutions sustain momentum below the 5.1300 and 5.1200 ratios. Until then looking for quick hitting result remains a safeguard with proper risk management practiced.
Key USD/BRL Support and Resistance Levels
The tight range of the USD/BRL has proven worthwhile for technical traders luck enough to catch momentum. The additional impetus of known caution in the currency pair allows for signals coming from the USD/BRL to be interpreted for wagering. However, the realm of the currency pair until proven otherwise should not be counted on to produce rapid fire trading results regarding a change of direction.
What may intrigue traders is the temptation to look for upside reversals, particularly if the 5.1400 level continues to be sustained as support near-term. However, Friday may prove to be more volatile in the currency pair if folks react to Fed Chair Kevin Warsh’s speech. Though it is possible today that some financial institutions may seek to position themselves ahead of tomorrow’s results, but that is a speculative notion best left for technical wagers depending on interpretation of chart action.
USD/BRL Price Chart
USD/BRL Trading Risks Ahead of Fed Chair Speech
The USD/BRL has provided cautious results the past month based on the growing shadow which is coming from the Brazilian election to be held early October. While global events and domestic economic issues have been relatively calm considering the current circumstances in the Middle East, speculators need to remain alert for sudden changes which could produce a sentiment shift. However, until then the current tight range of the USD/BRL looks like it will remain a betting ground. Support levels should be watched, if they suddenly appear vulnerable the USD/BRL could create results that may be viewed as dynamic. Entry price orders are urged particularly because of tomorrow’s speech by the Fed’s Kevin Warsh.
USD/BRL Short-Term Outlook: What Traders Should Watch
Having straddled the lower realms of its near-term values some traders may believe now is the time to look for upside. However, the results in the USD/BRL have proven choppy and moves higher have been met by selling. The current price level of the currency pair is intriguing, but what may look like calm trading waters should be treated carefully by speculators so they are not caught in tidal changes which could suddenly emerge before the weekend.
USD/BRL Short Term Outlook:
Current Resistance: 5.1510
Current Support: 5.1430
High Target: 5.1850
Low Target: 5.1360
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