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USD/BRL: Speculative Technical Range and Unclear Outlooks – 07 February 2023

The USD/BRL is trading within the upper realms of its near-term price range as Tuesday gets ready to begin for the currency pair, and speculators have decisions to make.

The USD/BRL finished Monday’s trading near the 5.1460 ratio, which is within the higher levels of its near-term value range. A high around the 5.2130 mark was attained yesterday, but a reversal lower ensued and the USD/BRL did in fact finish below Monday’s opening price of nearly 5.1670. The lower finish may intrigue speculators who are monitoring the USD/BRL closely.


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The USD/BRL touched a low last Thursday around nearly 4.9400, in the wake of Wednesday’s U.S Federal Reserve interest rate hike which was anticipated. However, on Friday the USD/BRL jumped higher like most major currency pairs teamed against the USD, this is when the U.S jobs numbers came in spectacularly above expectations. The U.S. hiring strength certainly surprised financial houses and the USD/BRL suddenly joined a bullish ride upwards, catching many speculative bearish positions betting in the wrong direction.

Trend Reversal in the USD/BRL may Attract Contrarian Speculators

The USD/BRL has a rather solid history of providing choppy conditions that do not always correlate to the broad Forex market. However, there are periods of time when the currency pair certainly does mirror the result of other major currency pairs. Since the 3rd of January, when the USD/BRL was trading near the 5.4780 ratios it has been able to create a rather substantial bearish trend, yes there were reversals to be dealt with, but moving lower was technically strong.

Yesterday’s high near 5.2130 was last seen on the 24th of January.Importantly the reversal off of this high yesterday also touched the low seen on the 24th of January after the USD/BRL reversed back to its bearish trend on that day too.

Traders may believe Monday’s USD/BRL Short-Term Highs were a Nervous Reaction

Choppy conditions are likely to be seen in the USD/BRL in the near term as financial houses seek more clarity regarding the U.S. Federal Reserve interest policy outlook. Another potential hike in March from the U.S. central bank has been heard and likely digested into the Forex market already. The question now is if inflation and hiring will start to show additional weakness in economic reports to come over the next weeks. Financial houses have been forecasting a less aggressive U.S. Federal Reserve and some may still be counting on this to occur.

Speculators should watch the opening of the USD/BRL closely today. Typically the currency pair delivers a gap upon opening and this is often a rather intriguing indication of short-term sentiment. If the USD/BRL were to open lower this may be a surprise, but it may indicate a belief the USD/BRL can traverse slightly lower. Traders should use narrow price targets in the near term; the USD/BRL is likely to be choppy. The use of solid risk-taking tactics will benefit day traders.

Brazilian Real Short-Term Outlook:

Current Resistance: 5.1650

Current Support: 5.1330

High Target: 5.1970

Low Target: 5.0967

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