USD/BRL declines near the 200-day SMA, eyes on Argentinian elections

USD/BRL saw more than 0.30% losses and fell to monthly lows.
Argentinian left-wing Sergio Massa was unexpectedly the highest-voted candidate in the first-round elections from Argentina on Sunday.
Brazil will release Mid-month inflation data from October on Thursday.
Investors await high-tier economic data from the US to continue modelling their expectations on the Fed.

Patricio Martín FXStreet

On Monday, the USD/BRL fell to its lowest level since early September, towards the 5.010 area, down by more than 0.30%. The broad-based USD weakness in FX markets can explain this trajectory and focus is now set on high-tier economic activity figures from the US released this week.

On the BRL side, mid-month inflation data from October will be closely watched on Thursday. In addition, investors should monitor the Argentinian political situation as it is one of its main trading partners. On Sunday, Sergio Massa, representing the left-wing Union Por La Patria movement, unexpectedly was the front-runner in Argentina’s first-round elections over the favourite Javier Milei from la Libertad Avanza. It is worth noticing that both candidates are on opposite poles economically, and the winner will shape the area's economic landscape, which could affect the BRL price dynamics.

On the USD side, the US will release the S&P Manufacturing PMI from October on Tuesday, followed by the Q3 Gross Domestic Product (GDP) and the Core Personal Consumption Expenditures from September, the Fed’s preferred inflation gauge. All data points will guide investors in modelling their expectations for the next meetings, and in the meantime, markets are confident that the Fed won’t hike again in 2023 and those dovish bets, makes the USD lose interest.

USD/BRL Levels to watch

The technical analysis of the daily chart suggests a neutral to bearish stance for USD/BRL as the bears work on staging a recovery and gaining further ground. The Relative Strength Index (RSI) points south below its middle point, while the Moving Average Convergence (MACD) histogram presents rising red bars. On the other hand, the pair is below the 20-day Simple Moving Average (SMA) but above the 100 and 200-day SMAs, highlighting that on the broader picture, the outlook still favours the bulls.

Support levels: 5.0000 (200-day SMA), 4.9700, 4.9500.

Resistance levels: 5.0535, 5.0700 (20-day SMA), 5.0940.

USD/BRL Daily Chart

USD/BRL

Overview
Today last price	5.0199
Today Daily Change	-0.0146
Today Daily Change %	-0.29
Today daily open	5.0345

Trends
Daily SMA20	5.0687
Daily SMA50	4.9834
Daily SMA100	4.9064
Daily SMA200	5.0011

Levels
Previous Daily High	5.098
Previous Daily Low	5.0255
Previous Weekly High	5.098
Previous Weekly Low	5.0098
Previous Monthly High	5.0784
Previous Monthly Low	4.8419
Daily Fibonacci 38.2%	5.0532
Daily Fibonacci 61.8%	5.0703
Daily Pivot Point S1	5.0073
Daily Pivot Point S2	4.9802
Daily Pivot Point S3	4.9348
Daily Pivot Point R1	5.0798
Daily Pivot Point R2	5.1252
Daily Pivot Point R3	5.1523

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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