USD/BRL Analysis Today - 26/06: Market Caution High (Chart)
Date
6/26/2024 2:48:03 PM
(MENAFN- Daily Forex) The USD/BRL remains within the elevated levels of its long-term price range as financial institutions display nervous behavioral sentiment regarding Lula da Silva's fiscal policy.
The USD/BRL has remained within the upper levels of its price range for a handful of days. The USD/BRL touched a high around 5.4845 last Wednesday, and although the currency pair hasn't broken above this ratio the past few days, the USD/BRL has not reversed abruptly downwards either. The USD/BRL is near the 5.4566 mark as of yesterday's close. It should be noted that Tuesday's trading started with a gap higher. On Monday the USD/BRL finished the day around the 5.3892 mark.
While Monday's lows this week did test support levels from the 17th of June, the value of the USD/BRL remains clearly within the higher elements of its one and three month technical charts. The rise in value of the USD/BRL has not correlated favorably to the global Forex market and the momentum higher may have a lot to do with nervous behavioral sentiment growing within financial institutions as they monitor Brazil's Workers' Party economic policies which are starting to have an effect after being in power long enough now to cause fiscal concerns/BRL and Bias Must be Given Attention
However, before a trader simply places a buying position on the USD/BRL because of their perspectives regarding Lula da Silva's economic policies in Brazil, personal bias must be examined by each trader. There is a legitimate danger of falling into a false narrative trap. In other words the USD/BRL price movement to the upside may still be under control and the currency pair could start to show correlations to USD centric notions rather soon.
Traders should certainly pay attention to the political jousting which is getting louder in Brazil between opponents, but short-term price fluctuations in the USD/BRL could certainly still produce some bearish price action.
The 5.4300 ratio could prove interesting as a support barometer in the short-term; if this level proves vulnerable a move to the 5.3900 may become a target for sellers. However, day traders need to be cautious regarding their ambitions.
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U.S Economic Data Correlations and the USD/BRL
On Thursday the U.S will release Gross Domestic Product growth and inflation reports, the outcomes should be watched and could affect the USD/BRL. If the U.S data is weaker than normal it should spark a USD centric selloff in Forex. If U.S data is weaker on Thursday and Friday, and the USD/BRL remains within the upper realms of its current price range and is still challenging resistance levels, this could be a bad sign for the Brazilian Real and show financial institutional nervousness is strong in Brazil.
Brazilian Real Short Term Outlook:
Current Resistance:
5.4590
Current Support:
5.4480
High Target: 5.4710
Low Target:
5.4240
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