USD/BRL technical analysis: Range-bound trading persists near R$5.0779 resistance

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US dollar drops 0.48% vs Brazilian real

Highlights

Brazil recorded US$3.2 billion in net dollar inflows in early October, with flows concentrated after the first-round presidential election.
The central bank held the Selic rate at 13.75%, and hedge funds maintained bullish BRL positions with higher demand for risk protection on election outcomes.
USD/BRL trades below key moving averages and is expected to range between R$5.0445 to R$5.1019 over 2 to 3 days, with mixed momentum signals.

Election-driven inflows and Selic pause alter BRL carry appeal

Brazil recorded net dollar inflows of US$3.2 billion in early October, largely concentrated in the week following the first round of the presidential election, according to Riotimesonline. This shift in capital came as the central bank maintained the Selic rate at 13.75% following earlier rate cuts, narrowing the yield gap with the U.S. and influencing the relative appeal of BRL carry trades. Option market positioning reflected these developments, with hedge funds maintaining bullish exposures to the Real after Flavio Bolsonaro’s first-round win and increased premiums for Risk protection on potential election upsets, as reported by Risk.

Mixed momentum signals as price straddles technical boundaries

On the technical front, USD/BRL is trading below the MA-20 and MA-200 but remains just above the MA-50. Immediate resistance sits at the Ichimoku Kijun level of R$5.0779, while support is defined by the recent price floor. Momentum indicators present a mixed picture: MACD signals strong buy momentum, ADX is neutral, and RSI is in buy territory. Stochastic RSI provides a strong buy signal and CCI is oversold, yet Bull/Bear Power points to sellers dominating intraday, with the Awesome Oscillator offering no clear direction.

Sideways outlook prevails as volatility defines short-term risks

Over the next 2 to 3 trading days, the expected range is R$5.0445 to R$5.1019, representing a typical volatility band relative to current levels. There is a 65% probability of an upward move, while the likelihood of a decline stands at 35%. The baseline scenario envisions price action remaining within a sideways corridor between immediate support and resistance. A sustained break above R$5.0779 could invite stronger upside momentum; a drop below support would create room for additional losses.

Anton Kharitonov, expert at Traders Union, views the USD/BRL as held in check by recent capital inflows into Brazil and narrowing interest rate differentials. He notes that technical signals are mixed, with prices below key averages and no dominant intraday momentum. Positioning in the options market points to lingering election risk and a cautious tone. "Until USD/BRL decisively reclaims R$5.0779, I remain on the sidelines and expect only range-bound price action."

In a recent review, analysts highlighted a bearish bias for USD/BRL as the pair continued to trade below major technical averages, reflecting persistent downside pressure. The current technical setup introduces a mixed momentum landscape, with option market dynamics and capital flows now adding extra layers of risk, making a sustained break above R$5.0779 a pivotal indicator for potential trend reversal.

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.