USD/BRL holds RR$5.1368 support: Technical outlook

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US Dollar vs Brazilian Real down 0.67%

Highlights

US Treasury operations now double their buyback size to at least $4 billion each, increasing market liquidity and lowering long-term yields.
Lower Treasury yields have contributed to a weaker US dollar environment, directly impacting USD/BRL performance against other currencies.
USD/BRL faces strong intraday selling pressure with technical indicators bearish and price expected to remain in a R$5.1368 to R$5.1884 range over the next days.

Expanded Treasury buybacks and lower yields spur broader dollar softness

The US Treasury Department has recently expanded its long-term bond buyback operations, doubling each buyback from $2 billion to at least $4 billion per operation, according to Finance Yahoo. This decision has injected additional liquidity into the US Treasury market and contributed to lower long-term Treasury yields, which in turn has weighed on the value of the US dollar against other currencies. These developments have promoted a softer dollar environment, providing a backdrop for the current performance of the US Dollar vs Brazilian Real.

Downside momentum as technicals indicate oversold bias

USD/BRL is positioned below the MA-20 at R$5.1912 and MA-50 at R$5.1838, but remains above the MA-200 at R$5.1411. The Ichimoku Kijun at R$5.1853 serves as immediate resistance. On the momentum front, MACD provides a Sell signal, while ADX remains neutral. RSI stands at 21.5, and both the Stoch RSI and CCI indicate oversold conditions. Bull/Bear Power continues to favor sellers, affirming intraday dominance, while the Awesome Oscillator confirms a strong sell bias. Price action is near the lower end of today’s range on low volatility.

Downside risks prevail as breakout thresholds narrow

Looking ahead to the next 2-3 trading days, USD/BRL is projected to fluctuate between R$5.1368 and R$5.1884. The probability of an upward move is considered very low, while the likelihood of further downside remains high. The baseline expectation is for price to consolidate within this corridor. If resistance at R$5.1853 is breached, a short-term recovery could develop; conversely, a dip below R$5.1368 may lead to accelerated selling pressure.

Anton Kharitonov, Traders Union expert, sees the expansion of US Treasury bond buybacks as a key factor softening the US dollar against the Brazilian Real. He notes technical momentum remains firmly bearish, with USD/BRL trading below significant moving averages and strong sell signals dominating the indicators. Further downside looks probable unless resistance at R$5.1853 is reclaimed. "Until USD/BRL breaks above R$5.1853, there is no reason to expect a sustained recovery in this pair."

Earlier, analysts noted that USD/BRL was showing mixed momentum as technical signals suggested a tentative shift toward bullish potential, despite broader selling pressures. The current article strengthens the bearish outlook with fresh evidence of persistent downside risk, highlighting the importance of monitoring R$5.1368 as a key support level that could trigger additional selling if breached in the days ahead.

Source of Data: USD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.