USD/BRL Analysis 22/09: Fast Reactions (Chart)

(MENAFN- Daily Forex) Reactive trading in the USD/BRL was seen last week. The currency pair was near the 5.3000 vicinity as the U.S Fed got ready to announce its FOMC decision. Upon the rate cut delivered the USD/BRL immediately dropped to around the 5.2750 vicinity, but then began to climb again and finish trading around 5.3110 on Wednesday. Curiously, Thursday's opening gap was lower and the USD/BRL broke below the 5.2700 momentarily. But within a couple of hours, the currency pair was again near 5.3100.

The USD/BRL went into the weekend near the 5.3280 ratio, this after spiking to a low of nearly 5.2700 on early Thursday, this as large traders continued to react fast to their perceptions regarding the U.S Federal Reserve.

The USD/BRL has been within the lower part of its long-term range, but last week's rate decision from the Fed had been anticipated by financial institutions. This left the door open for definite spikes as first reactions to the interest rate cut were seen, but as the FOMC Statement was digested big institutions largely understood they were comfortable with the equilibrium being seen in the USD/BRL.

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

Since falling below the 5.4000 ratio on the 11^th of September the USD/BRL has been able to sustain its lower price level. Now financial institutions will likely be looking for additional impetus which could fuel their value sensitivity accordingly. The U.S will release Gross Domestic Product numbers this Thursday, and if there are any surprises Forex and the USD/BRL will be impacted. Also, on Friday the U.S will release its Core PCE Price Index reports which could prove worthwhile for day traders to keep their eyes on.

Until the two reports later this week, financial institutions will have to consider the price realm of the USD/BRL and likely test known support and resistance levels. The USD/BRL did experience a couple of violent gaps last week because of the Federal Reserve impact, it will be interesting to see if the currency pair opens without violence this morning – or if another gap emerges and highlights more nervousness.

EURUSD Chart by TradingViewNear-Term USD/BRL Trading

If the 5.3000 level below maintains its durability today and tomorrow this will signal that financial institutions are keen on waiting for the U.S data later this week. That could open the door to an attractive speculative atmosphere for day traders who want to bet on quick hitting prices using known support and resistance targets.

• Traders need to remember volumes in the USD/BRL are inconsistent and this sometimes leads to wide spreads which need to be dealt with by using entry orders.
• Some traders may think the USD/BRL has the ability to traverse lower, but until the growth and inflation numbers from the U.S later this week, the currency pair may produce choppy results.

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