Euro to Brazilian real rate steady after Selic pause: Can EUR/BRL maintain upward momentum?

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Euro vs Brazilian Real up 0.5% today

Highlights

Brazil's central bank kept the Selic rate unchanged at 13.75% to address ongoing inflation concerns and bolster the Real.
The decision affirms a restrictive monetary policy amid fiscal uncertainties after President Lula's reelection, influencing currency dynamics.
EUR/BRL shows bullish pressure with price near intraday highs and an expected range of R$6.1082 to R$6.1902, but overbought signals warn of a short-term correction.

Central bank pause and fiscal caution drive real demand shift

Brazil's central bank concluded its period of interest rate reductions by holding the benchmark Selic rate steady at 13.75%, a decision that reflects persistent inflation concerns following President Luiz Inacio Lula da Silva's reelection, according to Investing.com. By maintaining a high policy rate, the central bank limits domestic liquidity and provides an incentive for capital inflows into Brazilian assets, which can support demand for the Real versus the Euro. This monetary policy decision highlights a cautious stance amid fiscal uncertainties and may shape near-term currency moves.

Bullish bias wanes as mixed signals warn of overbought risk

EUR/BRL is positioned above the hourly MA-20 at R$6.1478 and MA-50 at R$6.1448, with the price set well above the long-term MA-200 at R$5.8845. Immediate resistance emerges at the Ichimoku Kijun level of R$6.1506. Among technical indicators, MACD shows a Strong Sell signal while ADX is Neutral. RSI and CCI are both neutral, but Stoch RSI is in the overbought region, suggesting a risk of short-term pullback. Bull/Bear Power is slightly positive at 0.0064, indicating mild buyer dominance during the low-volatility session. This creates a setup where intraday bullish activity contrasts with mixed indicator signals and possible overbought conditions.

Sideways trend likely as upside probability outweighs near-term risks

For the next one to two trading days, the expected range for EUR/BRL is R$6.1082 to R$6.1902 based on typical volatility. The baseline scenario calls for sideways movement within this corridor. A decisive move above the R$6.1506 resistance level could allow a test of the range top, while a drop below R$6.1082 may expose the pair to further downside toward lower supports. The probability of an upward move remains very high, with downside risk considered low in the short term.

Anton Kharitonov, expert at Traders Union, sees EUR/BRL holding above key averages but notes that technical signals are mixed, with overbought risk apparent. He believes Brazil's decision to hold the Selic at 13.75% adds fundamental support for the Real but uncertainties around inflation and fiscal policy keep the outlook guarded. The analyst is cautious due to the flat session and risk of a short-term pullback, despite mild buyer dominance. "Base case remains sideways for EUR/BRL unless resistance at R$6.1506 is broken — until then, I stay defensive."

Earlier, analysts noted that EUR/BRL was exhibiting a broadly bullish structure but faced correction risk due to overbought technical conditions. With the latest consolidation above major moving averages and mixed indicator signals, traders should monitor for a potential breakout above R$6.1506, which could set the stage for fresh momentum beyond the established range.

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

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.