The current market bias for the BRL to USD exchange rate is bearish.
Key drivers include the expected monetary easing from the Federal Reserve, with three rate cuts projected by mid-2026 likely weakening the USD. The Central Bank of Brazil has signaled a cautious approach, maintaining a high Selic rate of 15% but suggesting potential cuts starting March 2026 may support the BRL. Additionally, persistent fiscal challenges and high public debt in Brazil are contributing to concerns about investor confidence in the BRL.
In the near term, the exchange rate may trade within a stable range, reflecting recent patterns.
Upside risks include a stronger-than-expected global economic recovery, which could bolster demand for commodities and positively impact the BRL. Conversely, ongoing political uncertainty and potential governance issues in Brazil could undermine the currency's stability and weaken the BRL.