The USD to BRL exchange rate is currently range-bound.
Key drivers include:
- The Federal Reserve's planned interest rate cuts in 2026 are likely to weaken the USD as markets anticipate easier monetary policy.
- Brazil's Central Bank has maintained high interest rates to control inflation, hinting at potential cuts later in 2026 which could stabilize the BRL if properly managed.
- Ongoing political challenges and high public debt in Brazil could dampen confidence in the BRL despite a potential easing policy.
In the near term, the USD to BRL is expected to trade within a stable range, as the current price is already 2% above the three-month average.
Upside risks include unexpected improvements in Brazil’s fiscal situation that bolster the BRL. Downside risks encompass external shocks, like a steep drop in global commodity prices, which could negatively impact Brazil's economy and the BRL's value.
