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USD/BRL: Dynamic Week of Trading Ahead for Brazilian Real – 24 October 2022

The USD/BRL enters this week of trading with the promise of dynamic price action as Brazil braces for it upcoming election on Sunday the 30th of October.


The USD/BRL went into the weekend around the 15.1610 mark and traders should expect a gap upon the currency pair’s opening this morning as always. The guarantee of the Brazilian election which will be held next Sunday on the 30th of October has the potential to cause dynamic price action in the coming days. Intriguingly the USD/BRL went into weekend with a bearish price trend. The outcome of the election remains uncertain and current polling shows a tight race.

A five-day chart of the USD/BRL clearly shows the USD/BRL was near a high around the 5.30000 mark much of last week. Monday through Wednesday produced a test of this resistance several times with some slight price action above, but for the most part the resistance level consistently held its ground.

On Thursday of Last Week Support Suddenly was Proven Vulnerable

While resistance last week remained quite evident, support levels also demonstrated it was quite capable from Monday through Wednesday. However, on Thursday something technically interesting occurred, resistance suddenly incrementally lowered with a high slightly below the 5.2600 proving it was strong and the same result was seen on Friday. And at the same time support began to crumble and the 5.2300 ratio began to be penetrated below.

After the 5.2300 mark was punctured lower, the USD/BRL began to see a test of the 5.1800 mark which had last been traded on the 11th of October in a sustained manner.Selling pressure continued Friday before going into the weekend and the USD/BRL actually demonstrated a bearish trend.

Financial Houses may be Wagering on the Presidential Election in Brazil to Produce a ‘Surprise’

Technically the USD/BRL was able to produce signs of bearish momentum on Thursday and Friday of last week. Technically the results are interesting, and fundamentally it may suggest financial houses suspect the outcome of the election in Brazil may produce a ‘surprise’ result.

A couple of weeks ago it was assumed by many that the left leaning candidate Lula would win rather easily, but recent polling shows a tighter than expected result with President Bolsonaro perhaps gaining momentum. Speculators need to be careful with the USD/BRL, nervous sentiment is sure to cause volatility in the coming days as financial houses worry about the results. Clarity is what financial institutions want, besides a friendly ‘pro-business’ landscape. Support near the 5.1400 to 5.1000 ratios should be watched in the short term and it may be targeted by speculators.

Brazilian Real Short-Term Outlook:

Current Resistance: 5.1885

Current Support: 5.1499

High Target: 5.2610

Low Target: 5.0990

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