USD/BRL Analysis Today - 20/08: Back To Familiar (Chart)

(MENAFN- Daily Forex) The USD/BRL was able to begin yesterday with another dose of selling which has brought the currency pair back to within trading ranges which speculators may find attractive.

• The USD/BRL closed yesterday's trading near the 5.4065 mark, and Monday's low was actually around the 5.3770 vicinity.
• The currency pair is traversing value it last saw in the middle of July, and it should be noted the USD/BRL also traded within this realm in the middle of June.
• Speculators who watched the USD/BRL sustain bullish momentum higher the past six months and touch apex ratios near 5.8700 briefly on the 5th of August may be breathing easier.

Financial houses clearly believed the USD/BRL had been overbought when global market chaos was in full bloom in the first week of August. Tranquility has not only returned to global markets, but behavioral sentiment has in fact calmed down regarding the USD/BRL as it again has started to correlate with Forex markets. This doesn't mean the sun will continue to shine on the Brazilian Real positively, but at least shows the currency is healthy enough to move in a manner that mirrors large moves in other currency pairs teamed against the USD.

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The ability of the USD/BRL to trade lower yesterday after last week's rather continuous test of resistance near the 5.48000 ratio and reversals downward is interesting. The opening this morning in the USD/BRL should be watched. Global risk appetite is relatively high right now, which may continue to feed into optimism for more USD/BRL selling. The question is if yesterday's push lower was an outlier when the 5.38000 level was penetrated downwards, or if this was a signal financial institutions believe lower values in the currency pair are attainable near-term.

If the lower depths the USD/BRL currently stands continue to be demonstrated, this could open the door for more selling. Short-term traders will need to pull out three month charts if they are considering selling targets, this because a one-month chart offers little in the way of interpretation because of the current values being touched Trajectory Ambitions for the USD/BRL

Traders who continue to believe the USD/BRL is in overbought territory need to be careful. Yes, the currency pair certainly suffered from negative behavioral sentiment the past six months due to loud debate between the Brazilian government and Brazil's Central Bank. However, for the moment things appear calm.

• Yet, this could change because Brazil's Central Bank chief Roberto Campos Neto will attend the Fed's Jackson Hole Symposium and he is scheduled to speak publicly, but that will happen only on Saturday.
• Will the Brazilian Central Bank Chairman sound positive this weekend?
• Traders may want to lean into selling positions of the USD/BRL in the short-term, but they should be careful.

Brazilian Real Short Term Outlook:

Current Resistance:
5.4150

Current Support:
5.4010

High Target: 5.4450

Low Target:
5.3840

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