USD/BRL Forecast 03/09: Can The Pair Hold Below 5.10?

(MENAFN- Daily Forex) This currency pair has continued to correlate comfortably with USD centric notions the past handful of days. Yesterday's price action sustained lower momentum and day traders will be compelled to start looking at a monthly and mid-term chart perspectives in order to gauge their next decisions. While shadows certainly lurk over Brazilian financial institutions it appears that for the moment influence is coming from global sentiment. The current ratios of the USD/BRL will offer additional tests as near-term feelings are compared to mid-term outlooks.

Top Regulated Brokers1 Get Started 74% of retail CFD accounts lose money USD/BRL Momentum Builds as the Pair Returns Below 5.10

Nearly four full trading sessions after the speech by Fed Chair Kevin Warsh the USD/BRL continues to demonstrate an ability to move lower. Even in the wake of heightened Middle East worries which have developed the past few days, the USD/BRL has turned in technical evidence which highlights support vulnerability.

Yesterday's big move lower also displayed downwards velocity, which may put extra eyes on the USD/BRL as it opens in a few hours. The ability of the USD/BRL to move back into a lower known range not seen since the second week of August offers consideration of coming paths and the confidence level of financial institutions. Due to the lower volumes of the USD/BRL the pair doesn't always correlate to the broad Forex market yet results for the past couple of weeks have shown a tendency to do so USD/BRL Extend Its Decline Below 5.10?

The 5.1000 ratio in the USD/BRL became a target quicky per a look at yesterday's technical action after the 5.1500 support parameter collapsed. Lower price action was then sustained going into the close. When the USD/BRL opens today USD centric questions will continue to flourish. Financial analysts still appear uncomfortable about what decision and rhetoric will come from the U.S Fed on the 16th of September.

Today's price action will be put to an immediate test, but if there is not a gap higher it may signal that financial institutions still want to lean into the potential of a stronger Brazilian Real, meaning USD/BRL downside action may remain prevalent. However, retail traders should remain realistic about pursuit of lower realms in the USD/BRL. There doesn't seem to be enough cause for bold moves lower in the near-term. If the USD/BRL were to challenge the 5.0500 level in the near-term this looks like a step too far for small traders to wager upon.

EURUSD Chart by TradingViewUSD/BRL Key Levels: Why 5.10 Is the Pivotal Zone

USD/BRL price action the past month has been full of reversals. Day traders should remain cautious about the sudden ability of the currency pair to develop a strict one way avenue lower. Because of the approaching election in Brazil and lack of strong risk appetite in global markets it is reasonable to assume the USD/BRL will traverse a known realm and not stray far away.

The 5.10000 mark should be watched intently today, if sustained price action is maintained below the realm it might cause some traders to search for lower depths, but a sustained burst above 5.1100 could bring thought of 5.1300 and 5.1400 back into the thinking process. The U.S holiday this coming Monday and lack of volatility early next Monday, may also cause some early positioning before the long U.S weekend.

USD/BRL Price ChartIs USD/BRL Oversold After Its Sharp Decline?

Yesterday's price action lower was significant. Will today provide a counterattack by financial institutions who believe the USD/BRL is in oversold territory? Yesterday's close and sustained sideways price action suggests that large players are comfortable with the current stance of the USD/BRL. But all it takes is several large orders in the Brazilian Real which has limited liquidity to influence results. The potential of a large commercial trade being placed for a buying position remains not only a danger, but could cause upside momentum to suddenly spark if sentiment is tentative in the USD/BRL/BRL Outlook: Dollar Volatility Could Spark a Reversal

Retail traders of the USD/BRL have important risk events ahead to consider, but the near-term appears correlated to the broad Forex markets. Because of the USD centric influences currently being seen and the general lack of clarity financial institutions have globally, it may prove wise for speculators to accept that values will prove choppy today and tomorrow. The lower price action in the USD/BRL has been solid, but upside reversals would not be a surprise.

USD/BRL Short Term Outlook:

Current Resistance: 5.1030

Current Support: 5.0920

High Target: 5.1360

Low Target: 5.0710

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