The current market bias for the BRL to USD exchange rate is range-bound.
Key drivers include:
- The Central Bank of Brazil's cautious hold on the Selic rate at 15% and anticipated cuts in 2026 could weigh on the BRL.
- The Federal Reserve is expected to make three rate cuts by mid-2026, likely leading to a weaker USD.
- Ongoing concerns about Brazil's fiscal challenges and rising public debt could affect investor confidence in the BRL.
Over the next 1–3 months, the BRL/USD is expected to trade within a stable range, reflective of the recent trading pattern.
Factors that could alter this outlook include an unexpected increase in U.S. interest rates, which would strengthen the USD, and a sharp rise in commodity prices that benefits the BRL.