The USD/BRL Crosses An Important Resistance Level As Higher Values Accumulate
USD/BRL Analysis
Following the Christmas break, the USD/BRL has witnessed increased purchasing pressure, and values have now reached significant resistance levels since the New Year began.
The USD/BRL finished at 5.4800 vicinities yesterday, and it has been steadily rising since hitting a low of nearly 5.1300 on December 23rd. Skeptics of the bullish trend may point out that the forceful bullish move occurred during the Christmas season, which is right, but it may not mask the fact that the USD/BRL is being bought because financial institutions are concerned about the upcoming changes to Brazilian fiscal policy.
With full trade volumes expected to resume in the near term, now that the Christmas season is over and financial institutions are returning to their trading desks, the USD/BRL will have an opportunity to revert downward. The currency pair is approaching significant resistance, and the 5.50000 level may be seen as a crucial psychological gauge. Although the USD/BRL temporarily surpassed this level in November and July of 2022, the Forex pair has not traded over 5.5000 since January 2022.
The next few days of USD/BRL trade might help set the tone for the months ahead. Fundamentally, the United States Federal Reserve will release its Meeting Minutes today, which will be a crucial component in determining behavioral opinion towards interest rate policy for the following half year.
In addition, Brazil's new administration is now in place. The incoming President can press for changes in economic policies that are more liberal in terms of expenditure on social purposes that are justified by his political party. This will almost probably raise concerns about the long-term value of the Brazilian Real.
Restoration to the full trading activity will provide traders with insight into the near-term outlook of financial institutions. The current run-up in value, which has been rather forceful over the last ten days, will have to be followed by a selling wave to generate the impression that the USD/BRL is overbought. If this does not occur and the higher price is maintained, it may raise the possibility that the USD/BRL is ready to enter a prolonged bullish trend. Traders should be aware that a gap is anticipated following the beginning of USD/BRL Forex today.
Support and Resistance
If the USD/BRL suddenly moves around the 5.4900 to 5.4990 ratios on the open, it might indicate that the objective of 5.5000 is firmly within the purview of speculative forces. A prolonged advance over 5.5000 would be considered bullish.
Support should be kept an eye on between 5.4600 and 4.4500. If they are readily exposed, it might indicate that the USD/BRL has been overbought in the last week and that the currency pair will attack the 5.4100 ratios in the short future.
Current Resistance: 5.4990
Current Support: 5.4510
High Target: 5.5660
Low Target: 5.4020