USD/BRL Analysis Today - 29/10: Market Holds Steady (Chart)

(MENAFN- Daily Forex) The USD/BRL has seen a sustained move sideways the past handful of days as financial institutions are clearly waiting on coming U.S economic data, and the results of the U.S election next week.

• The USD/BRL closed near the 5.7093 value yesterday in what can easily be described as another cautious day of results.
• The USD/BRL has essentially moved in a sideways trading pattern the past week.
• Yes, there has been price movement, but it is clear volumes remain cautious, which has also created rather tight support and resistance levels.

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Day traders wanting to participate in the USD/BRL must understand getting a good entry price into the currency pair will be important because the spread via the bids and asks are rather wide also. Incremental higher values have been seen, but take profit orders are essential to capture them.

Trading the USD/BRL over the coming days will grow in volatility. U.S economic data is coming tomorrow via growth numbers from the Advance GDP report. On Thursday inflation data will be seen via the Core PCE Price Index. And topping off the show will be the U.S jobs numbers on Friday. Typically, these reports would cause Forex chaos on their own, but the coming U.S election next Tuesday is overshadowing the marketplace and a reason for a lot of the caution now being seen in the USD/BRL Week's Double Trouble for the USD/BRL

Technical traders who have been wagering on the USD/BRL recently need to understand the rather tight price range seen may disappear completely. The economic data from the U.S will move the USD/BRL, but the biggest movers will come next week from the U.S Presidential result, and then be followed by the Federal Reserve's interest rate decision on the 7th of November.

USD/BRL trading has remained within the higher elements of its price range, the currency pair has correlated to weakness seen in other major currency pairs which are trading against the USD. However, the Brazilian Real has concerns of its own because financial institutions are not completely sure about Lula da Silva's fiscal policies – in other words they do not like the spending the Brazilian government is undertaking which is creating higher inflation. This has fueled the USD/BRL bullish trend.

EURUSD Chart by TradingViewUSD/BRL Near-Term Volatility and Risk Management

The USD/BRL may look like a comfortable place to trade because of its rather tight range the past week. But speculators should not be tricked, because the cautious trading at some point will disappear and financial institutions will start positioning via the reactions caused by the U.S economic data over the near-term.

• Next week's U.S election is certainly playing into the rather cautious approach also in financial institutions.
• Highs seen in the USD/BRL may appear overbought, but the constant trend upwards in the currency pair has been rather consistent.
• Looking for strong lower moves in the short-term may be misguided. Day traders need to be careful in the near-term.

Brazilian Real Short Term Outlook:

Current Resistance: 5.7150

Current Support: 5.7010

High Target: 5.7370

Low Target: 5.6890

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