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Overview of the USDBRL Currency Pair
The USDBRL currency rate represents the exchange rate between the United States dollar (USD) and the Brazilian real (BRL). This pair is heavily traded worldwide and its performance serves as a gauge for the health of the Brazilian economy.
In 2015, the Brazilian real slumped to its all-time low, trading at approximately 4.3 BRL for every USD. However, since then, the real has slightly bounced back and is presently hovering around 5 BRL per USD.
Factors Driving the Depreciation of the Brazilian Real
Multiple factors have contributed to the declining trend of the BRL. These include the crippling Brazilian economic crisis, which has dampened demand for the BRL and increased demand for the USD. Strength in the US economy has made the USD a more appealing investment choice. Finally, the difference in interest rates set by the Federal Reserve in the United States and the Central Bank of Brazil has resulted in the USD being a better option for carry trades.
Present Situation and Future Projections for the USDBRL Currency Pair
The future of the USDBRL currency pair is uncertain due to the expected continued weakness in the Brazilian economy. Complicating matters is the sign of the deceleration in the otherwise strong US economy. This could lead to potential volatility for the USDBRL currency pair.
Long-term, the viability of the USDBRL will largely be determined by the turn of events in the Brazilian economy. If it shows signs of recovery, the BRL may strengthen against the USD. However, if the status quo remains, further depreciation of the BRL can be anticipated.
Influencers on USDBRL Exchange Rate
The rate of USDBRL currency pair has seen many ups and downs over the years, mostly due to political incidents such as the impeachment of President Dilma Rousseff in 2016. Severe economic events as the 2015 recession and disparities in interest rates between US and Brazil have also played significant roles. Trading activities between the two countries have also led to changes in the currency exchange rate.
Recommended Indicators for Trading the USDBRL Currency Pair
There are numerous indicators that can guide in trading the USDBRL currency pair. These range from moving averages to help identify trends; the Relative Strength Index (RSI) indicating overbought or oversold conditions; and Bollinger bands predicting support and resistance levels.
Strategies and Tips for Trading the USDBRL Currency Pair
For successful USDBRL trading, employing technical analysis can reveal beneficial support and resistance levels, trends, and patterns. Remaining on top of news related to economic and political events, and interest rates can help the trader make informed decisions. It is crucial to utilize risk management techniques like setting stop losses and taking profits. Also, conducting trades through a reputable broker ensures proper execution and safety of funds.
