USD/BRL Analysis: Correlations and Overreactions as Volatility Looms – 17 September 2024
-- The USD/BRL has been able to demonstrate selling momentum since last Thursday.
-- This comes as a welcome relief to citizens in
-- The selling pressure in the USD/BRL has taken the currency pair around the 5.5050 ratio per yesterday’s closing.
-- Last Thursday the USD/BRL however was flirting with highs around the 5.6765 level.
The downturn in the USD/BRL has correlated to the broad Forex market as financial institutions have started to brace for tomorrow’s
Short-Term USD/BRL and Risk Management
After moving in an almost singular bullish trend all of 2024, USD/BRL selling the past few days has brought the currency pair back to values seen in the last week of August. But the USD/BRL has seen reversals lower during this long bullish streak upwards and short-term speculators need to keep this in mind. The USD/BRL may have sold off the past few days, but this doesn’t mean the currency pair is now going to display a steep track lower.
Fiscal uncertainty still clouds Brazil’s financial landscape. Trading houses focused on the USD/BRL would like to be completely USD centric regarding the value of the currency pair, but they cannot be. Too much loud noise is still coming from debate regarding monetary policy in
The 5.5000 Level as a Barometer
Yes, the
-- The question is what the reaction will be after the Fed’s rate announcement tomorrow?
-- ;If the Fed cuts by only 0.25% tomorrow, expect to see volatility and perhaps a bit of upward drift to the USD/BRL.
-- If the Fed does cut by 0.50% this could spur on more selling of the currency pair.
-- The 5.5000 level should be watched in the USD/BRL today and tomorrow before the Fed’s announcement, the price ratio will be a good barometer regarding the outlook of financial institutions dealing with the Brazilian Real.
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Brazilian Real Short Term Outlook:
Current Resistance: ;5.5080
Current Support: ; 5.5020
High Target: 5.5400
Low Target: ; 5.4890
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