Challenge of Support could Test June Price Action

The USD/BRL fell to fresh lows on Monday and then demonstrated rather consolidated price action as important support levels came into sight.

When the USD/BRL opens today it could potentially be hit with a sudden burst of activity and traders need to be cautious early in the day. Yesterday’s results saw the USD/BRL currency pair close near the 5.1250 mark and this outcome kept price action within sight of important support levels not sincerely seen since the middle of June.

While the results from Monday are intriguing, today’s outcome could produce equally fascinating speculative opportunities for USD/BRL traders. The USD/BRL has produced a solid amount of bearish price action since the first week of August. A high of nearly 5.3160 was seen on the 3rd of August. Traders should note that reversals upward have occurred too, this has not been a one way direction.

On the 21st of July the USD/BRL was trading near the 5.3100 ratio. The bearish price action in the Forex pair has been clear since then, but again pursuit of selling positions has not be a clear path to victory for traders, risk management has been essential to produce solid trading results. Yesterday’s trading which saw the USD/BRL trade lower than its outcome demonstrated on Friday, which saw volatile conditions via a sudden burst higher to nearly 5.2800 and then a strong drop to nearly 5.1500 is noteworthy.


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Current Support Ratios Need to be Monitored Closely as Values from June are Tested

The U.S will release key inflation data today and if the Consumer Price Index numbers are stronger than expected this could spur on short term buying of the USD/BRL. Today’s outcome from the U.S CPI numbers will produce sudden fireworks across Forex and the USD/BRL is certain to be effected by the results as financial houses react to the news.

  • Support near the 5.1025 level could prove important; if this number proves vulnerable the USD/BRL could see more selling and the 5.0800 ratio become a target.
  • If U.S CPI numbers are stronger than expected, the USD/BRL could produce a burst higher and resistance near the 5.1600 to 5.1800 levels should be watched diligently.

Cautious USD/BRL Trading Techniques could be Worthwhile before U.S data is released

The USD/BRL is trading near crucial support levels, but the publication of the U.S economic data will certainly create fast conditions for the USD/BRL based on the outcome.  The USD/BRL has certainly enjoyed a rather solid bearish cycle since the 21st of July, and today’s inflation data from the U.S may be a key for the currency pair over the near term.

If data meets expectations the USD/BRL may maintain its bearish mode and see support below tested. Traders need to be careful today and cautious traders may want to see the outcome of the U.S inflation data and let the USD/BRL calm down before attempting to pursue positions.

Brazilian Real Short-Term Outlook

Current Resistance:  5.1520

Current Support:  5.1049

High Target: 5.2030

Low Target:  5.07800

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