Can rising US yields and Brazilian rate cuts support USD/BRL?

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US dollar gains 0.54% vs Brazilian real

Highlights

Brazil received net dollar inflows of $3.2 billion in early October, fueling increased liquidity and currency activity for the Real.
The Selic rate stands at 13.75% after a series of cuts, reducing the Real's previous yield edge over other currencies.
USD/BRL exhibits strong short- and medium-term buying momentum, with price expected to range between R$5.0319 and R$5.0825 in low volatility.

Post-election inflows and US inflation shift Brazil real's momentum

Brazil’s local currency market saw net dollar inflows of US$3.2 billion in early October, with the majority of this activity concentrated in the week after the presidential first round, according to Riotimesonline. This heightened capital movement introduced added liquidity and shaped currency dynamics for the Real. Meanwhile, new U.S. consumer price data showing higher inflation lifted Treasury yields and supported the U.S. dollar, while Brazil’s Selic interest rate, now at 13.75% after a series of rate cuts, has moderated some of the Real’s earlier yield advantage.

Bullish momentum persists amid resistance cap and strong technicals

USD/BRL is positioned above the MA-20 at R$5.0425 and MA-50 at R$5.0308, but remains capped by the MA-200 located at R$5.115. Immediate support rests with the Ichimoku Kijun at R$5.0358. MACD signals strong bullish momentum, confirmed by a positive ADX signal, while RSI (58.86) and CCI both remain in their buy zones. Stochastic RSI is neutral, and Bull/Bear Power indicates strong buying pressure intraday. Awesome Oscillator is neutral, providing no clear trend reinforcement.

Upside favored as volatility band outlines stabilization scenario

Looking ahead, USD/BRL is expected to range between R$5.0319 and R$5.0825 over the next trading day, reflecting a typical volatility band relative to current levels. The probability of an upward move is high given current momentum, while a decline is considered less likely. The baseline expectation is for the pair to stabilize above immediate support, though a break beyond resistance could signal extended gains, with downside risk tied to a fall below the Ichimoku Kijun.

Viktoras Karapetjanc, analyst at Traders Union, sees confidence returning to the Brazilian Real as strong dollar inflows boost local liquidity. He believes macro and sentiment risk are both supportive, with new U.S. economic data and Brazil’s softer rate outlook increasing USD dominance in the short run. The analyst notes that technical momentum stays bullish but real progress depends on clearing R$5.115. "If support at the Ichimoku Kijun holds, I expect USD/BRL to remain resilient and the uptrend to continue in the near-term," he says.

Earlier, analysts noted that upward momentum in USD/BRL had strengthened on shifting US rate expectations, with resistance levels playing a pivotal role in determining direction. The latest analysis reinforces this view, highlighting renewed bullish signals and suggesting that sustained gains may hinge on the pair holding above immediate support amid persistent buying pressure.

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.