The USD/BRL finished Monday’s trading close to near-term lows and continues to exhibit a rather challenging and consolidated price range for speculators.
The USD/BRL closed trading yesterday near the 5.1600 mark, and if a trader has not looked at results the past week they might not believe anything significant has happened speculatively. However, a closer look at the USD/BRL displays some intriguing hints. Because after touching a low near the 4.9400 ratios on the 2nd of February and then climbing higher the next day, when the stronger than estimated U.S jobs numbers were published, the USD/BRL moved in sync with global Forex and then something interesting started to occur.
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Instead of seeing a high around the 6th of February the USD/BRL did not attain a high until this past Friday when the currency pair hit the 5.3100 level. Financial houses continued to buy the USD/BRL a couple of days after the U.S. Non-Farm Employment Change data release on the 3rd of February.
Many other major currency pairs did see bullish USD price action, but many also started to reverse back to bearish trajectories sooner compared to the USD/BRL. The USD/BRL did not reverse lower until this past Friday and then yesterday sold off again. The climb upward in the USD/BRL took place for nearly a week, showing the currency pair doesn’t always correlate in step with global Forex.
U.S Consumer Price Index and Fast Conditions for the USD/BRL
Having returned back to price ratios seen early last week, the USD/BRL now is close to interesting near-term support. A gap upon the opening of the currency pair should be anticipated today, and it may be extreme. U.S Consumer Price Index numbers will be published today and it will cause volatility for the USD/BRL based on the outcome of the inflation report. Behavioral sentiment in financial markets is nervous and Forex will see dynamic price action.
- If the U.S inflation numbers meet or are lower than anticipated the USD/BRL could see bearish sentiment reignited. Support levels near 5.1200 to 5.0800 should be watched carefully if the U.S. CPI numbers show weakness.
- Choppy conditions have been seen in the USD/BRL and traders need to use solid risk management to guard against whipsaw price action later today.
Bearish Traders may be anticipating early February USD/BRL Prices
From the last week of January until the first couple of days in February, the USD/BRL essentially traded the 5.1400 to 5.0450 levels with some outliers. Aggressive traders should be cautious today, the USD/BRL will certainly gap upon its opening as trading positions come in fast as financial houses prepare for and react to the U.S CPI results. Speculators should have stop losses in place. The USD/BRL will see dynamic price action today and tomorrow.
Brazilian Real Short-Term Outlook:
Current Resistance: 5.1750
Current Support: 5.1350
High Target: 5.2460
Low Target: 5.0485
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