USD/BRL Analysis: Reversal Lower After Highs Attained As Range Tested

The USD/BRL closed yesterday’s trading with a reversal lower leaving the currency pair within the middle of its near-term price range, this as global Forex remains nervous.

 Having gone into last weekend sustaining values above the 5.0000 was noteworthy, but yesterday’s trading managed to produce some selling which has brought the USD/BRL back a price range which has dominated the past month. In fact the current price of the USD/BRL is now near values that were seen two months ago. The broad Forex market has been choppy for a while and the USD/BRL is trading in a healthy manner. Yesterday’s close around the 4.9733 ratio done calmly. Lack of Fed Clarity and Mixed U.S DataWhile financial institutions certainly geared for a weaker USD in December of 2023, this based on the Federal Reserve’s rhetoric in the middle of that month about becoming more dovish, monetary policy has not effectively changed. Mixed U.S data led by stubborn inflation has put the U.S Fed in an uncomfortable spot and while they are not saying they were wrong, the U.S central bank seems to have walked back from its overly ambitious goal of cutting interest rates a handful of times in 2024. Two to three interest rate cuts this year seem like the realistic goal for the moment.The USD/BRL has reacted in line with many other major currency pairs as Forex has produced a steady stream of nervous results which have essentially led to sideways price action. Yes, there have certainly been fluctuations as financial institutions have wagered on the daily outcomes and mid-term outlooks provided by U.S economic data, but the price of the USD/BRL is testing values seen two months ago. Day traders can find opportunities, but they need to use their risk taking tactics carefully. USD/BRL speculators also need to be vigilant for gaps which happen when the currency pair opens for trading on a daily basis. Short-Term Dynamics and More USD/BRL Nervousness to ComeThe U.S will release a host of important economic reports this week, today a Consumer Confidence reading will be released. On Thursday GDP reports and the weekly Unemployment statistics will be brought forth. Nervous sentiment lingers within financial institutions as they react to the economic data from the U.S.

 Brazilian Real Short Term Outlook:

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