Dec 11, 2024 (MENAFN via COMTEX) --
(MENAFN - Daily Forex) The USD/BRL remains within sight of record price levels as financial institutions appear to remain nervous regarding Brazil's fiscal policies and support levels prove durable.
The USD/BRL closed its trading yesterday near the 6.0838 level as the apex values of the currency pair remain in sight. Financial institutions clearly remain rather unoptimistic about the potential for changes to suddenly arise from Lula da Silva's fiscal policies. While other major currencies have gained slightly versus the USD the past handful of days, the USD/BRL has shown a rather stubborn desire to remain near it upwards values.
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Consumer spending in Brazil has been strong and the GDP numbers are solid, but financial institutions have been punishing the Brazilian Real over the past eight months with rather consistent buying of the USD/BRL. While other currencies did gain against the
USD from July until the end of September, the USD/BRL did not correlate to the broad Forex market. Yes, the past two months have seen the
USD gain against many currencies, but the bullishness in the USD/BRL continues to highlight not only
USD centric strength, but Brazilian Real weakness regarding sentiment.6.1000 as Resistance in the USD/BRL and Nervous Trading
Risk adverse buying of the
USD has been strong over the mid-term. However, the inability of the USD/BRL to produce reversals lower the past handful of days is another sign that not all is well surrounding sentiment with the Brazilian Real. Resistance around the 6.1000 is an obvious caution sign, the lack of a strong selloff since testing this higher value seems to indicate financial institutions believe additional buying will develop.
Volumes in the USD/BRL are not comparable to the major currency pairs. And the USD/BRL has limited trading hours. Day traders need to use careful risk taking tactics taking into consideration gaps upon the opening of daily trading in the USD/BRL, and there is a need of entry orders to safeguard against large spreads between bid and ask prices. The USD/BRL is essentially near price levels it traversed late in November as resistance has held, but support ratios have seemed to incrementally rise. The 6.0000 has begun to look like a solid floor for the USD/BRL Bets and Remaining Patient in the USD/BRL
Trading in the USD/BRL has to be done with patience. The currency pair can certainly move fast and if a lot of leverage is used the USD/BRL can become dangerous quickly as it fluctuates. However if a trader is conservative and uses limited leverage, and has the ability to watch the USD/BRL trade for a handful of hours during the day, advantages can be found.
The U.S will release important inflation data tomorrow, which will provide another test of correlation for the USD/BRL - which may prove to fail. The higher elements of the USD/BRL being tested remains intriguing. If perceived support levels are tested, this could be an interesting way to look for some upside action. Looking for lower reversals when resistance levels are approached may also be possible as the USD/BRL trades in its tight higher range.
Brazilian Real Short Term Outlook:
Current Resistance: 6.0890
Current Support: 6.0780
High Target: 6.0970
Low Target: 6.0610
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COMTEX_460720439/2604/2024-12-11T04:17:44
