Forex Market: USD/BRL daily trading forecast

Yesterday’s trade saw USD/BRL within the range of 2.2375-2.2568. The pair closed at 2.2435, losing 0.10% on a daily basis.

At 11:37 GMT today USD/BRL was down 0.09% for the day to trade at 2.2420, which has also been the lowest level during the day.

Fundamental view

United States

Factory orders in the United States probably increased 11.0% in July compared to a month ago, following an increase by 1.1% in June. This indicator presents the total value of new purchase orders, placed at manufacturers for durable and non-durable goods, and can provide insight into inflation and growth in US manufacturing sector. In case orders increased more than anticipated, this would have a bullish effect on the greenback. US Census Bureau will release the official data at 14:00 GMT.

At 18:00 GMT the Federal Reserve is to release its “Beige Book” report. It is published eight times during the year. Each of the banks in the 12 Federal Reserve Districts gathers data in regard to current economic situation in the country on the basis of interviews with key business contacts, economists, market experts, and other sources. In case the Beige Book presents an optimistic economic outlook, this will usually support the greenback, while a pessimistic view will have a bearish effect on the currency.

Brazil

The Services Purchasing Managers Index probably entered the zone of contraction in August, falling to a reading of 48.14, according to a survey of experts. In July the PMI came in at 50.20, which has been the lowest reading since January. It is based on a survey, encompassing purchasing executives in about 350 companies, operating in the private sector. The index reflects the performance of indicators such as sales, employment, inventories and prices. Values above the key level of 50.0 are indicative of predominant optimism (increased activity in the services sector), while values below 50.0 signify pessimism. In case the PMI came below expectations, this would have a bearish effect on the real. Markit Economics is to release the official reading at 13:00 GMT.

The Central Bank of Brazils Monetary Policy Committee (COPOM) probably left the benchmark interest rate (overnight lending rate) without change at 11% at its policy meeting today, according to the median forecast by experts. The overnight rate was at a record low level of 7.25% in October 2012, while in April this year the rate was raised by 0.25% to the current 11%.

Short-term interest rates are of utmost importance for the valuation of national currencies. In case the Central Bank of Brazil is hawkish about inflationary pressure in the economy and, thus, decides to introduce a rate hike, this will provide support to the real. Respectively, maintaining or cutting the benchmark rate will have, as a result, a bearish effect on the national currency.

The decision on policy is expected to be announced at 22:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 2.2459. In case USD/BRL manages to breach the first resistance level at 2.2544, it will probably continue up to test 2.2652. In case the second key resistance is broken, the pair will probably attempt to advance to 2.2737.

If USD/BRL manages to breach the first key support at 2.2351, it will probably continue to slide and test 2.2266. With this second key support broken, the movement to the downside will probably continue to 2.2158.

The mid-Pivot levels for today are as follows: M1 – 2.2212, M2 – 2.2309, M3 – 2.2405, M4 – 2.2502, M5 – 2.2598, M6 – 2.2695.

In weekly terms, the central pivot point is at 2.2530. The three key resistance levels are as follows: R1 – 2.2735, R2 – 2.3109, R3 – 2.3314. The three key support levels are: S1 – 2.2156, S2 – 2.1951, S3 – 2.1577.