The USD/BRL continues to battle within the higher elements of its one month technical chart perspective. However, the past few trading sessions have seen the USD/BRL consistently sustain lower elements and finished Wednesday around the 5.1690. The USD/BRL did touch a high of nearly 5.2200 last Thursday. Day traders looking to pursue the currency pair should remain cautious, this because financial institutions seem to be doing the same thing.
After a consistent trend lower over the past handful of months, the USD/BRL has found some rather steady incremental moves upwards generate. The USD/BRL is correlating to the broad market, other major currencies are also struggling against USD centric strength. Those who believe the USD/BRL has been overbought should be careful about getting too attached to the notion that a strong reversal lower is going to develop in the short-term.
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Waiting on Impetus From Improved Outlook
Current Forex conditions have proven difficult for those who are biased to their national currencies. If a day trader is betting on lower price action in the USD/BRL simply because they have a tendency to bet in favor of their chosen currency against the USD this can become a costly mistake. It appears financial institutions still remain rather perplexed about their mid-term outlooks globally.
While it is a logical notion to believe the USD/BRL has been overbought and the lower ratios will be demonstrated again, momentum downwards has been missing. The 5.1600 ratio in the USD/BRL has proven to be rather stiff support the past week. Openings have produced some early price action via small gaps this week, but they have not be significant.
Coming U.S Holiday and Cautious Sentiment
There are a few days left during this week to trade the USD/BRL, but the approaching Independence Day holiday in the U.S will create a lack of volume this Friday. The July 4th holiday has become a long weekend escape for many large players, so day traders should be prepared for the lack of volume which may build starting this Thursday lasting into this weekend.
Next Monday the U.S banks will be officially closed.
The lack of coming volume is highlighted to make sure speculators are aware absent conditions from large players may create a vacuum in which volatility can be displayed.
While the coming Forex trading volumes are not equally similar to the Christmas and New Year holiday, traders should be braced for a few surprises to emerge.
USD/BRL traders looking for downside cannot be blamed, but impetus will have to develop.
Brazilian Real Short Term Outlook:
Current Resistance: 5.1730
Current Support: 5.1640
High Target: 5.1980
Low Target: 5.1540
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