US Dollar vs Brazilian Real falls 1.18% as Central Bank of Brazil holds Selic at 15%

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US Dollar vs Brazilian Real drops 1.18%

Highlights

President Lula dismissed prospects of a shared currency and reaffirmed focus on bilateral trade in local currencies, not replacing the US dollar.
Brazil's central bank held the Selic rate at 15% to fight inflation, despite IMF warnings of growth and reserve risks.
USD/BRL remains under sustained selling pressure, with technical signals bearish and a likely consolidation between R$5.05 and R$5.17 next week.

Policy focus and IMF cautions persist as Lula rejects shared currency

Brazilian President Lula downplayed speculation about a shared currency, stating there has been no internal discussion on this initiative. His administration is prioritizing bilateral trade in local currencies to address commercial friction while keeping the US dollar's central role intact. The Central Bank of Brazil maintained the Selic rate at 15% to control inflation, amid IMF warnings that this policy could restrain growth and pressure reserves, highlighting Brazil’s dependency on the US dollar.

Bearish momentum persists as technical indicators show seller dominance

Technical signals for USD/BRL confirm persistent downward pressure, with the Ichimoku Kijun at R$5.2643 now serving as immediate resistance above the current price. Momentum indicators maintain a negative bias: the D1 MACD shows a Sell, ADX remains weak, D1 RSI sits at 41.88, the CCI is at -107.56, and the Stoch RSI points to mild oversold conditions. The BBP is below zero, suggesting intraday seller dominance, while the Awesome Oscillator supports the ongoing bearish trend. Despite moderate volatility, price action has steadily moved toward the lower boundary of the daily range.

Further declines likely as consolidation favors downside breakout

In the short term, USD/BRL is expected to trade within a typical volatility band between R$5.05 and R$5.17. The likelihood of an upward move remains low (under 20%), making further declines more probable. The primary scenario is for the pair to consolidate within this corridor, with resistance at R$5.17 and support at R$5.05. A clear move beyond either boundary would set the direction for the next phase.

Viktoras Karapetjanc, leading analyst at Traders Union, notes that macro pressures and domestic policy actions are shaping momentum in USD/BRL. He sees Brazil’s stable Selic rate and pragmatic approach to currency policy as supportive for the Real in the near term. Technical signals remain bearish, limiting upside potential below R$5.17. "With fundamentals and sentiment aligned, further weakness in USD/BRL is the likelier path unless a major shift occurs above resistance," he says.

Earlier, analysts noted that USD/BRL was under sustained bearish pressure due to persistent selling and a generally negative technical outlook. The latest developments reinforce this trend, and with both technicals and macro policy factors now aligned, traders should watch for a potential downside break below the R$5.05 support that could accelerate the move lower.

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

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