USD/BRL Analysis Today - 5/11: Selloff Shows Nerves (Chart)

(MENAFN- Daily Forex) The USD/BRL sold off quickly upon opening yesterday, falling from a high of nearly 5.8750 to important support ratios near the 5.7600 realms, but before traders believe a sustained downturn is about to occur they should think twice.

• Yesterday's gap lower in the USD/BRL took the currency pair from a high seen on Friday near the 5.8750 vicinity and rapidly produced values near important support levels.
• However, the downturn in the USD/BRL on Monday was then met by a sustained sideways movement, which technically could be described as another incremental climb.
• The inability of the USD/BRL to break support near the 5.7500 could be a warning sign.

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Yes, the USD/BRL did correlate to the broad Forex market in many respects yesterday, but there is no hiding the fact the currency pair remains within its long-term highs. Today's U.S election will certainly create nervousness in the global Forex marketplace and volatility will be demonstrated. However, there is another dangerous consideration to be made regarding the USD/BRL, and that is because Lula da Silva and Donal Trump are not politically aligned.U.S Election Results and Potential USD/BRL Friction

The USD/BRL has been within a strong bullish run since March of 2024. Yes, the move higher has not been a one way street, reversals lower are seen on occasion, so day traders cannot bet blindly. But the move higher in the USD/BRL has occurred because financial institutions do not have an entirely favorable opinion of Lula da Silva's fiscal policy. The USD/BRL closed yesterday's trading near the 5.7910 level.

It is a huge 'if', but upon the U.S election results this time tomorrow the USD/BRL may be put into a position in which it will set the table for a whirlwind of volatility upon opening on Wednesday. If Donald Trump wins the U.S election, financial institutions trading the Brazilian Real may react nervously to the consideration Trump is not a fan of Lula da Silva. Betting on the outcome of the U.S election is a dangerous game. Volatility is likely to become strong today in the USD/BRL as financial institutions position for potential outcomes. Trading will be fast Term Dangers in the USD/BRL

If Kamala Harris wins the election, financial institutions are likely to remain focused on the Workers Party fiscal policy of Brazil and maintain their current stances in the USD/BRL which are also not optimistic regarding a steady downwards trend.

However, if Trump wins the U.S election this could propel the USD/BRL to further bullish buying.
The U.S Fed will enter the picture on Thursday and announce their FOMC policy.
The Fed is expected to cut the U.S interest rate by another 0.25 basis point. However, volatility will be supreme in Forex and the USD/BRL near-term.
The Brazilian Real should be treated with caution over the next day and a half Real Short Term Outlook:

Current Resistance: 5.8050

Current Support: 5.7840

High Target: 5.9000

Low Target: 5.7620

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