USD/BRL Outlook:
Bearish, as the rate is below its recent average and near lows amid pressure from multiple factors.
Key drivers:
• Rate gap: The Federal Reserve has kept interest rates steady, while Brazil's Central Bank maintains a high SELIC rate, supporting the BRL.
• Risk/commodities: The rise in oil prices is putting upward pressure on the BRL, as Brazil benefits from its status as a major exporter of agricultural goods.
• One macro factor: The Brazilian economy's strong trade surplus has added stability to the BRL, countering some USD strength in global markets.
Range:
Expect the USD/BRL to drift within its recent range, as it is currently near lows but lacks strong drivers for a significant recovery.
What could change it:
• Upside risk: A surprise improvement in US economic data that boosts the USD might elevate the exchange rate.
• Downside risk: Renewed geopolitical tensions negatively impacting US assets could further weaken the USD against the BRL.
