Brazilian Real: Election risks threaten carry story – Societe Generale
Societe Generale strategists note USD/BRL has formed a higher low and is testing its 200-day moving average near 5.22, with upside projections toward 5.34–5.38.
Societe Generale strategists have downgraded Brazil's currency, the Brazilian Real (BRL), to neutral due to election and fiscal risks. The USD/BRL pair has formed a higher low near 5.22 and is testing its 200-day moving average at approximately 5.34-5.38. If USD/BRL breaks above this resistance level, an extended rebound may occur, with potential targets at 5.34/5.38 and 5.46.
The BRL's weakness towards the 200-day moving average near 5.205 is drawing attention, with thin liquidity and political tensions ahead of the election contributing to its underperformance. While the Selic rate is expected to drop to 11.50% by the end of 2027 if President Lula wins and a divided Congress takes office, there is still support at the low recorded this week at 5.08.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
