USD/BRL tests August lows ahead of key Brazilian data

USD/BRL declined towards 4.8475 and has already lost more than 2% in September.
On Tuesday, markets expect the central bank's primary surplus to come in at BRL 16.8 billion.
The USD trades soft, consolidating ahead of Wednesday’s Fed meeting.

Patricio Martín FXStreet

In Monday’s session, the USD/BRL continued to lose ground and has already tallied a 2.17% decline in September, falling to its lowest point since mid-August at 4.8475.

On the BRL’s side, it is gaining ground as the Brazilian government has taken up fiscal reforms, which are expected to positively impact the government’s account. On Tuesday, budget data will be reported, with the primary surplus expected to have doubled to BRL 16.8 billion in relation to March’s BRL 7.1 billion. In addition, the Real may also gather momentum on the outcome of Gross Domestic Product (GDP) and Trade data on Thursday.

On the USD side, it is trading soft against its rivals, with its DXY index consolidating. However, the US Treasury yields are still high, cushioning its losses. Regarding the Wednesday Federal Reserve (Fed) meeting, markets expect a hawkish pause, with the bank signalling that the tightening cycle isn’t done yet. Investors will also monitor fresh macro forecasts and revised dot plots to continue modelling their expectations towards the upcoming meetings. In that sense, the tone of the Fed will impact the price dynamics of the US Dollar and hence could limit the downside of the pair.

USD/BRL Levels to watch

Technical indicators on the daily chart indicate that the USD/BRL sellers hold the upper hand. The downward slope of the Relative Strength Index (RSI) reinforces this negative sentiment, as does the MACD, which is displaying red bars, indicating a strengthening bearish momentum. Moreover, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), suggesting that the bears are firmly in control of the bigger picture.

Support levels: 4.8427, 4.8115, 4.7880.

Resistance levels: 4.8902 (100-day SMA), 4.9143 (20-day SMA), 4.9450.

USD/BRL Daily Chart

USD/BRL

Overview
Today last price	4.8473
Today Daily Change	-0.0192
Today Daily Change %	-0.39
Today daily open	4.8665

Trends
Daily SMA20	4.9217
Daily SMA50	4.8758
Daily SMA100	4.8929
Daily SMA200	5.0293

Levels
Previous Daily High	4.8782
Previous Daily Low	4.8593
Previous Weekly High	4.9871
Previous Weekly Low	4.8593
Previous Monthly High	4.9981
Previous Monthly Low	4.7239
Daily Fibonacci 38.2%	4.8665
Daily Fibonacci 61.8%	4.871
Daily Pivot Point S1	4.8578
Daily Pivot Point S2	4.8491
Daily Pivot Point S3	4.8389
Daily Pivot Point R1	4.8767
Daily Pivot Point R2	4.8869
Daily Pivot Point R3	4.8956

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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