USD/BRL Forecast: USD Continues to Consolidate Against BRL – 31 October 2022

Currently, I believe this pair is trading between the 5.20 level on the bottom and the 5.50 level on the top. I don’t know that we break out of here anytime soon, so if you are a range-bound trader, this might be the type of pair that you are looking for. You can use both of those levels as a bit of a guide as to which direction to head, as the market has been rather steady for the last couple of months. That’s interesting to contemplate since the risk appetite has been so volatile.

The Brazilian real is also a proxy for South American general, and so with this, you need to be very cautious that the smaller economies around the world don’t drag Brazil down with it. The US dollar strength has been like a wrecking ball against almost everything, but as it has been quiet here, this might be one of the better pairs to trade if you can simply let the market do its thing.

If we break above the 5.50 level, then it’s possible that this market goes toward the 5.80 level. On the downside, if we break down below 5.20, then I think the 5.00 level makes a lot of sense as a potential target. Keep in mind that this market will continue to be very noisy as the Brazilian elections will cause a lot of chaos on Sunday as well, so we could see volatility pick up. But if we stay in this range, you have to assume that more of the same will be in store.

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