EUR/BRL Outlook: Slightly positive, but likely to move sideways as the rate is above its recent average and trading near mid-range.
Key drivers:
• Rate gap: The European Central Bank is maintaining a cautious monetary policy, while Brazil's Central Bank has kept high-interest rates, creating a favorable gap for the BRL.
• Risk/commodities: Oil prices are currently high, impacting global market movements; a stronger BRL can pressure the euro as Brazil is a commodity-driven economy.
• One macro factor: Brazil's record trade balance surplus enhances its economic standing, which supports the BRL against the euro.
Range: Movement is likely to test extremes within the recent 3-month range as domestic and external factors influence trading.
What could change it:
• Upside risk: A surprising increase in Eurozone retail sales data could boost the euro.
• Downside risk: Political uncertainty surrounding Brazil's upcoming elections may introduce volatility in the BRL.