EUR/BRL Outlook: Slightly positive, but likely to move sideways, as the rate is slightly above its recent average and lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank's policy stance remains stable while Brazil's Central Bank holds interest rates high to combat persistent inflation, presenting a tighter environment for the BRL.
• Risk/commodities: Oil prices are showing volatility, currently above their average, which could influence the Brazilian economy since Brazil is a commodity exporter.
• One macro factor: The political tensions surrounding new US tariffs on Brazilian goods are contributing to market uncertainty and can weigh on the BRL.
Range: The EUR/BRL is likely to drift within its current range, maintaining stability but showing potential for minor fluctuations.
What could change it:
• Upside risk: A positive outcome from negotiations regarding US tariffs or improved economic data from Germany could bolster the EUR.
• Downside risk: Further developments in Brazil's economic policy or worsening inflation could put downward pressure on the BRL.
