Brazilian Real: 200-DMA capping losses against US Dollar – Societe Generale

Societe Generale’s technical team notes USD/BRL’s decline stalled near 4.88 in May and the pair has since traded within a base. Price action struggles above the 200-day moving average, signalling weak upside momentum. They flag 5.23 as critical resistance for confirming a broader uptrend, while the recent pivot low at 5.04 is seen as important support.

Base formation with key resistance

"USD/BRL decline stalled around 4.88 in May, and the pair has recently evolved within a base. However, it has so far struggled to establish itself above the 200-DMA, highlighting a lack of steady upward momentum. The upper boundary of this base at 5.23 represents a key resistance."

"A move above this hurdle will be crucial to confirm a broader uptrend. The recent pivot low at 5.04 could be a crucial support."

"In Brazil, the central bank lowered the Selic rate by 25bp to 13.75%, delivering its fifth straight cut. The statement did not provide new insights and so our house view remains that policy is now on hold."

"The next meeting is on November 4th after the presidential election (runoff on 4th and second round due on 25 October). The tightening by the Fed has narrowed the easing window for the BCB. Our house call is for easing to resume only in 2Q27."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)