USD/BRL Analysis Today - 21/01: What's Next

(MENAFN- Daily Forex)

• The USD/BRL closed its trading near the 6.0315 mark yesterday, depending on the bid and ask being seen on brokers platforms.
• The USD/BRL performed rather tranquil in the wake of the Trump inauguration yesterday, however things can always change.
• The notion that financial institutions have been bracing for Donald Trump since the first week of November carries some weight in the USD/BRL.

The heightened values of the USD/BRL have been seen since the last week in November, the currency pair essentially broke through the 6.0000 level on the 29^th of November and has sustained values above this ratio rather consistently. The high for the USD/BRL was touched on the 18^th of December when the 6.3000 level was challenged. Since the apex values were seen before the holiday season, volatility in the USD/BRL has been noteworthy, but the worst of nervous tension seems to have been valued into the Brazilian Real for the moment.

Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Sentiment Considerations in the USD/BRL

The USD/BRL has seen a rather polite range the past week of trading, yesterday's results produced lower price action, this as the currency pair fell from the 6.0700 vicinity seen on Friday and opened with a gap yesterday and saw sustained lows traversing the 6.0300 ratios. Traders need to take into consideration the spread in the USD/BRL, it could prove useful to use an entry price order to pursue the currency pair.

Financial institutions will remain nervous about the outlook via relations between Brazil and the U.S, and this will factor in the value of the currency pair. As Donald Trump begins to focus on international affairs and trade agreements this could stir the USD/BRL. However, as long as Lula da Silva stays out of the spotlight and avoids criticism from the new White House administration, currency price levels in the USD/BRL may feel like fair market value Trading in the USD/BRL

The quiet conditions seen in the USD/BRL the past couple of weeks is likely being welcomed by financial institutions. However, shadows do lurk because negotiations between China and the U.S will start to cause potential unease. Brazil's largest trading is China, and it would not be a surprise if this becomes a factor in the USD/BRL in the coming weeks as implications regarding possible side effects start to become a concern. Contagion is a possibility regarding sentiment.

• The USD/BRL above the 6.0000 may look overbought to many people, but financial houses are also worried about Lula da Silva's economic policies in Brazil which are causing inflation to remain problematic.
• Looking for sustained downturns in the USD/BRL for the moment seems like wishful thinking.
• Near-term traders should take advantage of perceived support levels and look for limited quick hitting upside bets using take profit targets.

Brazilian Real Short Term Outlook:

Current Resistance: 6.0440

Current Support: 6.0190

High Target: 6.0810

Low Target: 5.9930

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