Forex Market: USD/BRL daily trading forecast

Yesterday’s trade saw USD/BRL within the range of 2.2510-2.2698. The pair closed at 2.2687, gaining 0.28% on a daily basis.

At 8:06 GMT today USD/BRL was up 0.04% for the day to trade at 2.2698. The pair touched a daily high at 2.2699 at 6:15 GMT.

Fundamental view

United States

At 14:00 GMT Federal Reserve Chair Janet Yellen is expected to take a statement at the Jackson Hole Economic Policy Symposium. Yellen took office as Chair of the Board of Governors of the Federal Reserve System on February 3rd 2014 for a four-year mandate ending on February 3rd 2018.

The greenback received massive support against its major peers, following the release of the minutes from Feds most recent meeting on policy on Wednesday. The minutes revealed that US labor market is improving at a faster than projected pace, while these better labor market conditions could lead to a sooner than expected increase in the Fed cash rate.

Brazil

The deficit on Brazilian current account probably widened to 5.8 billion USD in July from 3.34 billion USD in June. Nations current account produced a record-high deficit at the amount of 11.529 billion USD in January this year.

The current account reflects the difference between nation’s savings and its investments. It is the sum of the balance of trade, net current transfers (cash transfers) and net income from abroad (earnings from investments made abroad plus money sent by individuals working abroad to their families back home, minus payments made to foreign investors).

A current account surplus indicates that a country’s net foreign assets have increased by the respective amount, while a deficit suggests the opposite. A country with a surplus on its current account is considered as a net lender to the rest of the world, while a current account deficit puts it in the position of a net borrower. A net lender is consuming less than it is producing, which means it is saving and those savings are being invested abroad, or foreign assets are created. A net borrower is consuming more than it is producing, which means that other countries are lending it their savings, or foreign liabilities are created. Therefore, a contracting surplus or a widening deficit on the current account of a nation usually has a bearish effect on its currency.

Banco Central do Brasil is expected to release the official data at 13:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 2.2632. In case USD/BRL manages to breach the first resistance level at 2.2753, it will probably continue up to test 2.2820. In case the second key resistance is broken, the pair will probably attempt to advance to 2.2941.

If USD/BRL manages to breach the first key support at 2.2565, it will probably continue to slide and test 2.2444. With this second key support broken, the movement to the downside will probably continue to 2.2377.

The mid-Pivot levels for today are as follows: M1 – 2.2411, M2 – 2.2505, M3 – 2.2599, M4 – 2.2693, M5 – 2.2787, M6 – 2.2881.

In weekly terms, the central pivot point is at 2.2673. The three key resistance levels are as follows: R1 – 2.2785, R2 – 2.2973, R3 – 2.3085. The three key support levels are: S1 – 2.2485, S2 – 2.2373, S3 – 2.2185.