With a finish around the 5.2330 mark on Tuesday the USD/BRL has been able to demonstrate an ability to flirt with its lower depths and not cascade too high. Friday’s nervous apex around the 5.3275 level saw some lower movement arrive upon the opening for the currency pair on Monday. Lower depths on Monday’s challenged the 5.2125 vicinity.
Lower trading volumes in the USD/BRL and the limited amount of hours the currency pair trades has helped volatility be less of a feature compared to many other major currency pairs. However, the openings for the USD/BRL are problematic too under the present conditions. The USD has picked up some early strength this morning via shifting sentiment. The opening for the USD/BRL needs to be treated carefully because at this moment a rise upwards mirroring the broad Forex market would not be surprising.
Participation of Day Traders in the USD/BRL
Day traders should not get fooled by the seemingly polite hovering range of the USD/BRL, yes, it has been rather tranquil comparatively, but swift conditions can still be seen. Monday’s trading in which the USD/BRL took a nosedive happened as financial institutions reacted to U.S President Trump’s Iranian war dialogue in which he offered the hope of an agreement to finish the conflict. However, this hope turned into a more pragmatic opening on Tuesday in which the ‘wishful thinking’ looks like it was questioned.
The USD/BRL opened Tuesday’s trading with an abrupt move up, and the 1.2800 level was soon in play. A reversal lower then took place, followed by some slight volatility higher – and then concluded with some sharp selling and a retest of the 5.2125 realm. Today’s opening needs to be treated carefully in the USD/BRL.
Economic Data Has Taken A Backseat
Financial institutions in Brazil appear to be in favor of the methods being used by the Central Bank of Brazil, and this has seemingly created some nice downward momentum for the Brazilian Real over the mid-term.
However, the chief catalyst for the USD/BRL in the near-term remains news about the Middle East conflict and its side effects.
The ability of the USD/BRL to hold onto its lower depths is intriguing and alluring for day traders.
But genuine nervous sentiment will continue to cause reactions which could cause resistance levels to be tested.
Economic data is important certainly, but behavioral sentiment being generated by rather fragile global conditions is causing pushback.
The support and resistance levels seen the past couple of days in the USD/BRL are noteworthy.
Today’s opening in the currency pair should be watched, if there is a jump higher, but it remains slight and doesn’t penetrate known higher marks, some traders may want to look for lower wagering terrain.
Brazilian Real Short Term Outlook:
Current Resistance: 5.2420
Current Support: 5.2300
High Target: 5.2750
Low Target: 5.2055