Euro vs Brazilian Real holds steady as Brazil Treasury cancels NTN-B bond auction

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Euro vs Brazilian Real slides 0.61% today

Highlights

Brazil's Treasury suspended its inflation-linked NTN-B bond auction, reducing immediate supply of BRL-linked inflation hedges.
Floating-rate LFT bonds were auctioned as planned, supporting liquidity in short-term government securities and local fixed income markets.
EUR/BRL displays strong bearish momentum with key technical indicators oversold, likely consolidating within R$5.8382–5.8968 and further declines favored short term.

Auction cancellation tightens supply as LFT sale sustains market liquidity

Brazil's Treasury canceled its scheduled auction of inflation-linked NTN-B notes while proceeding with the auction of floating-rate LFT bonds, according to Marketscreener. The withdrawal of new NTN-B issuance temporarily reduces the supply of inflation-protected instruments, which may affect investor access to BRL-linked hedging options. Meanwhile, continued LFT supply maintains liquidity in short-term government securities, influencing the flow of funds within the local fixed income market.

Bearish momentum persists as EUR/BRL faces layered resistance

On the technical front, EUR/BRL is trading below the MA-20 at R$5.9018 and MA-50 at R$5.9121 on the hourly chart, and remains well below the MA-200 at R$6.0954 on the daily timeframe. The Ichimoku Kijun at R$5.9024 is acting as immediate resistance. Key momentum indicators show persistent weakness: MACD signals a Sell bias and ADX registers as Neutral. The RSI is at 36.5, also indicating a Sell, while Stoch RSI and CCI are both in Oversold territory, highlighting deep short-term exhaustion. Bull/Bear Power (BBP) points to dominance by sellers in intraday momentum, and the Awesome Oscillator supports the ongoing downtrend.

Downside risk prevails as short-term consolidation becomes likely

Looking ahead over the next two to three trading days, the projected range is R$5.8382 to R$5.8968, representing a typical volatility band relative to current levels. There is a very low probability of an upward move, with a much higher likelihood for further declines, making a recovery scenario less probable in the short term. The baseline expectation is for price consolidation within this range. Should EUR/BRL break above immediate resistance, a bullish scenario could develop; conversely, a move below support could accelerate the prevailing downtrend.

Viktoras Karapetjanc, analyst at Traders Union, sees the EUR/BRL pair under pressure after Brazil’s Treasury canceled the planned NTN-B auction, impacting BRL supply dynamics. He believes technical signals remain weak, and market sentiment is cautious as investors weigh reduced access to inflation-linked instruments. Despite resistance at R$5.9024 and oversold momentum, the baseline expectation is for further consolidation or downside. "With both fundamentals and technicals aligned to the downside, I expect EUR/BRL to stay under pressure unless there is a decisive break above R$5.9024."

Earlier, analysts noted that EUR/BRL was experiencing mixed technical signals with a bias toward persistent downside risk. The latest developments—which include a deepening of technical weakness and shifts in Brazil's fixed income market dynamics—reinforce the near-term bearish scenario, making it important for traders to monitor the sustainability of support near R$5.8382 as a trigger for potential further declines.

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.