The current market bias for the USD to BRL exchange rate is bearish.
Key drivers include:
- The U.S. Federal Reserve is anticipated to implement rate cuts in 2026, which may weaken the USD.
- Brazil’s Central Bank maintained a high Selic rate, though projections suggest a gradual reduction, giving the BRL some potential upward momentum.
- The approach of Brazil's presidential elections and ongoing fiscal pressures could lead to increased volatility for the BRL.
In the near term, the USD/BRL is expected to trade within a stable range, maintaining close to recent averages.
Upside risks include unexpected strength in global commodities, which could support the BRL. Conversely, a stronger-than-expected USD resurgence based on U.S. economic data could drive the rate higher.
