Brazilian Real: 200-DMA capping losses against US Dollar – Societe Generale
Societe Generale’s technical team notes USD/BRL’s decline stalled near 4.88 in May and the pair has since traded within a base. Price action struggles above the 200-day moving average, signalling weak upside momentum.
Societe Generale’s analysts have identified the declining USD/BRL pair stuck near 4.88 in May, with the currency pair oscillating within a defined range. The 200-day moving average has become a barrier for upward price momentum, suggesting a weak bullish trend. They emphasize 5.23 as a crucial resistance level, which would signal a broader uptrend, while the recent pivot low at 5.04 is considered vital support.
The 200-DMA’s inability to be surpassed indicates a lack of consistent upward movement. Crossing above this hurdle is essential to validate a sustained uptrend. In Brazil, the central bank decreased the Selic rate by 25 basis points to 13.75%, with this being the fifth consecutive reduction; however, no new information was provided, and the bank's stance remains unchanged.
The following monetary policy meeting is scheduled for November 4th, following the presidential election (runoff on October 4th, and the second round on October 25th). The Fed’s rate hikes have limited the scope for the BCB to further cut rates. Our team believes that rate cuts will resume only in the second quarter of 2027.
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