US Dollar vs Brazilian Real consolidates as technicals stay bearish after selloff and weak company earnings

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US Dollar vs Brazilian Real drops 0.52%

Highlights

Brazilian Q4 earnings were historically weak, with only 37% of companies beating net income estimates, a record low in XP data.
Market attention is on a probable Selic rate cut by Banco Central do Brasil at the March 18 meeting.
USD/BRL trades below major technical levels with oscillators mostly bearish, likely ranging between R$5.1200 and R$5.2600 short-term.

Earnings disappointments and rate cut bets drive sentiment shift

Brazilian companies reported a record low for Q4 earnings, with only 37% surpassing net income estimates — the lowest on record in XP’s dataset. EBITDA beats were reported by just 21% of firms, far under the 42% long-term average. Expectations have also focused on a likely reduction in the Selic benchmark interest rate by Banco Central do Brasil on March 18.

Mixed technical signals as intraday weakness confirms bearish tilt

On the technical side, momentum indicators are mixed: the D1 MACD shows a mild buy signal but faces a neutral ADX, while the weekly chart (W1) indicates further downside with both MACD and RSI. The daily RSI is neutral at 50, but flashes a sell signal on longer timeframes. Stoch RSI flags strong sell, with several intraday timeframes oversold, and the CCI is elevated near overbought levels. Daily BBP suggests moderate buyer dominance, though this is inconsistent on lower timeframes. The Awesome Oscillator supports buyers, yet the daily price slipped 0.52% and quickly retreated to today’s low after an initial upward gap, reflecting overall intraday weakness and confirming a bearish tilt across oscillators.

Limited upside risk as extended range favors downside bias

Over the next five trading days, the expected USD/BRL range is forecast between R$5.1200 and R$5.2600, representing a typical volatility band relative to current levels. The probability of a strong price increase is very low (less than 20%), making further declines more likely, with a baseline expectation of sideways movement within this range. A bullish scenario would require a break and daily close above R$5.2375, while further downside takes shape if the price sustains below R$5.1200.

Viktoras Karapetjanc, macro and sentiment expert at Traders Union, sees the current USD/BRL setup as reflecting both local economic headwinds and persistent technical weakness. He notes that weak earnings from Brazilian companies and expectations for a Selic rate cut frame a lack of conviction for strong BRL appreciation. The expert remains moderately constructive but highlights that a clear upside break is needed to shift market sentiment. Near-term price action is likely to stay sideways unless bulls reclaim R$5.2375. "Momentum is building, but we need to see a decisive close above resistance before trusting the upside," Karapetjanc says.

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.