BRL/USD Outlook:
The BRL/USD is slightly positive, but likely to move sideways as the rate currently trades above its 90-day average and is near recent highs. However, lacking a clear driver could lead to stagnation.
Key drivers:
• Rate gap: The Central Bank of Brazil maintains the Selic rate at 15%, while the US Federal Reserve's policies support a stronger USD.
• Risk/commodities: Rising oil prices are strengthening the USD due to increased safe-haven demand, impacting the BRL negatively.
• One macro factor: Political uncertainty in Brazil ahead of the 2026 elections has increased the BRL's risk premium, putting downward pressure on its value.
Range:
Expect the BRL/USD to hold steady within its recent range, with potential minor fluctuations but little movement towards either extreme.
What could change it:
• Upside risk: A shift in Federal Reserve policy towards easing could strengthen the BRL.
• Downside risk: Further political instability in Brazil or unexpected negative economic data could weaken the BRL.