Euro vs Brazilian Real gains about 9.5% after Lula's election victory sparks volatility in Brazilian markets

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Euro vs real surges 9.55% today

Highlights

Luiz Inácio Lula da Silva’s presidential runoff victory led to significant volatility across Brazil-related financial markets.
The Brazilian real weakened against major currencies as investors expressed uncertainty regarding Brazil's fiscal outlook and future policy direction.
EUR/BRL traded near session highs at R$6.1191 on broadly negative momentum, with a projected five-day range of R$5.5805 to R$6.18 and high probability of a downward move.

Market volatility expands after Lula win amid policy concerns

Following Luiz Inácio Lula da Silva’s presidential runoff win on October 26, 2026, several news sources reported substantial volatility in Brazil-related financial markets. Early Asian trading saw sharp reactions in derivatives and currency instruments tied to the Brazilian real, with a notable weakening against major currencies. These developments were attributed to investor concerns about Brazil's fiscal outlook and uncertainty regarding future government policy.

Anton Kharitonov, expert at Traders Union, remains cautious on EUR/BRL after the post-election rally. He notes that fiscal and policy uncertainty in Brazil drove recent market volatility, triggering heavy speculation and weak investor confidence. Despite EUR/BRL trading above major moving averages, Kharitonov points to bearish momentum signals and a structurally fragile uptrend. He emphasizes the high risk of a retracement if prices fail to clear resistance at R$6.18. "Current bullish moves are likely temporary — downside pressure will intensify unless fundamentals stabilize," Kharitonov warns.

Viktoras Karapetjanc, expert at Traders Union, sees renewed opportunities for traders after the election-driven surge. He remains confident that the market’s strong reaction reflects robust investor demand and forward-looking expectations. The rally above key moving averages demonstrates that bullish momentum is still present, despite short-term volatility. He believes upside scenarios could unfold quickly if policy signals improve or EUR/BRL breaks out above R$6.18. "The market offers compelling setups at these levels — I expect further growth if sentiment shifts or macro conditions align," Karapetjanc states.

Jainam Mehta, market strategist, takes a balanced tactical view on EUR/BRL following the recent swing. He highlights that current price action suggests a likely consolidation phase unless the pair decisively moves beyond key support or resistance. Mehta notes the divergence between elevated volatility and prevailing bearish momentum, which may present contrarian short-term trading opportunities. "If EUR/BRL rejects R$6.18 again, tactical shorts could benefit from mean reversion over the coming days," Mehta advises.

Bearish momentum prevails despite rally and key resistance proximity

EUR/BRL is trading above the MA-20 (R$5.6699), MA-50 (R$5.8246), and MA-200 (R$5.8867), indicating positive momentum across short, medium, and long timeframes. Support is reinforced by the Ichimoku Kijun at R$5.7351. The immediate resistance stands at R$6.18, with a near-term floor at R$5.8867. However, the MA-50 remains below the MA-200, so a bearish structure underlies the ongoing rally. Momentum indicators are mostly negative: MACD, ADX, RSI, Stochastic RSI, and CCI all suggest a weak or bearish regime. The Bull/Bear Power (BBP) is slightly positive at 0.007, hinting at marginal intraday buying interest against prevailing sell signals from most oscillators. The pair rallied strongly after opening with a downside gap, and intraday volatility is elevated at 1.27%, with price action close to session highs even as momentum remains bearish.

Earlier, analysts noted that EUR/BRL was under persistent bearish pressure, with technical signals indicating vulnerability to further declines. The current rally following Brazil's election introduces heightened volatility and a short-term bullish impulse, but downside risks remain dominant unless EUR/BRL can sustain levels above R$6.18.

Source of Data: EUR Price Analysis by TU

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

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