USD/BRL Forecast Today 07/06: Pulls Back From Highs (Video)
(MENAFN- Daily Forex)
The Brazilian real initially seemed like it was going to sell off even further during the trading session, and the US dollar taking advantage of that on Thursday. But we have seen a complete turnaround again. Ultimately, this is a market that I think will continue to find buyers on dips, but it does make a certain amount of sense that there might be a little bit of caution here.
We are overextended to the upside, and perhaps even more importantly, at least in the short term, we have the jobs number coming out of the United States on Friday. At this point, I would love to see some type of pullback where we could see 5.20. And as a buying opportunity, that's assuming we even pull back that far. On the other hand, if we can break above the highs of the Thursday session, then it opens up the possibility of a move to the 5.5 real area.
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But I do think that's a longer term trade. I do think that we need to see some type of momentum jump back into this market to make that happen. Ultimately, it would not surprise me at all to see a little bit of a choppy and sideways market, perhaps with a slightly negative tilt over the next couple of sessions trend is your friend
But longer term, the trend is most certainly to the upside, and I think that continues to be the case. The Federal Reserve remains stubbornly tight with its monetary policy, and at the same time, there are a lot of concerns about Brazilian exports or I should just say, emerging market economies in general. So with that, I think you've got a situation where eventually we go higher.
I have no interest in shorting, and the 200 day EMA sits near the 5.05 level, and I think we need to break down below there before we really have the idea of shorting this USD/BRL currency pair for any type of trade. Because of this, I think it's only a matter of waiting for the right set up, and then taking advantage of the value trade.
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