USD/BRL Analysis Today 28/01: Tests Support Below (Chart)
Date
1/28/2025 2:20:43 PM
(MENAFN- Daily Forex) The USD/BRL has been able to break below the 6.0000 level and sustain lower depths, but important questions remain which have not been resolved and speculators should brace for more volatility.
The USD/BRL closed near the 5.8950 mark on Monday. The ability of the currency pair to drop below the 6.0000 last Wednesday and sustain values below is noteworthy. The USD/BRL spent late November until early last week trading mostly above the 6.0000 level.
financial institutions which have been nervous about outlook for the Brazilian Real likely have felt that above 6.0000 the currency was overbought.
However, nervous conditions which have been seen in the USD/BRL have not gone away. Plenty of concerns remain regarding outlook over the mid-term for the currency pair. While the 5.9000 level has been able to be penetrated and a low around 5.8625 was tested on Friday, the currency pair remains in elevated price levels. The question for day traders is if support levels will now prove to be durable as behavioral sentiment faces additional tests in the days ahead Trump and USD/BRL Nervousness
The USD/BRL has not consistently traded below the 5.8500 level since the end of November. The ability of the USD/BRL to challenge higher values the past two months was not a mistake, real concerns exist about Brazil's fiscal responsibility per its government spending, and now there is the addition of a U.S President who has very different viewpoints compared to Brazilian President Lula da Silva. These circumstances are not going to change soon and will continue to create nervousness for financial institutions.
The U.S Fed will release its FOMC Statement tomorrow and it is likely to be cautious. The U.S central bank leadership is nervous about Donald Trump's economic policies too. However, President Trump could heap scorn upon the Fed tomorrow if the central bank sounds too cautious. This could cause nervous conditions in global Forex and for the USD/BRL too via reactions Opportunity in the USD/BRL Near-Term
The ability to produce downside in the USD/BRL the past week has corelated to the broad Forex market which has been a healthy sign for the Brazilian Real. The selloff shows the USD/BRL does not trade in a vacuum and remains a strong part of the global economy.
The long-term trend in the USD/BRL has been bullish, but the past month has in fact seen selling outpace buying steadily. The 5.9000 level in the USD/BRL should be watched in the short-term and may serve as a barometer. There are plenty of risk events in the days ahead as the U.S Fed speaks tomorrow and President Trump is set to talk more about tariffs, this could spark momentary short-term risk adverse buying of the USD. USD/BRL speculators should be careful over the near-term and look for quick hitting trades.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Brazilian Real Short Term Outlook:
Current Resistance: 5.9050
Current Support: 5.8910
High Target: 5.9510
Low Target: 5.8670
EURUSD Chart by TradingView
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