Brazilian Real Struggles to Break Above Key Resistance

The Brazilian Real (BRL) has been struggling to gain momentum against the US Dollar (USD), as indicated by its inability to break above the 200-day moving average. According to Societe Generale's technical team, the USD/BRL pair declined in May and has since traded within a base formation. This base is bounded by key resistance at 5.23 and support at 5.04, with the latter being a recent pivot low.

The technical team notes that a move above the 5.23 resistance level would be crucial to confirm a broader uptrend for USD/BRL. The Brazilian central bank's recent decision to lower the Selic rate by 25 basis points to 13.75% has not provided any new insights, and policy is expected to remain on hold until after the presidential election in November.

The Fed's tightening cycle has narrowed the easing window for the BCB (Brazilian Central Bank), with Societe Generale expecting easing to resume only in the second quarter of 2027.