Brazilian Real: Politics shapes post-ambush direction – Societe Generale

An 8.5% fall triggered by the unwinding of long positions leaves the Brazilian Real set to resume trading at 5.4155, with Societe Generale strategists pointing to intense pressure on the currency. The strategists identify the retested July 2025 high near 5.60/5.63 as an interim obstacle for the pair, while March levels of 5.34 and 5.24 provide support. They emphasise that the choice of the next finance minister and the direction of fiscal policy will be crucial.

BRL resumes trading following steep sell-off

"In EM, it was all about Brazil yesterday after the ambush of the currency, bonds, soft commodities and stocks."

"The BRL will resume trading at 5.4155 after nosediving 8.5% following the unwinding of long positions."

"Where the currency goes from here will be partly decided by the appointment of the next finance minister and the direction of fiscal policy."

"Inflation data for October is due on Thursday. The BCB meets next week."

"Technically, the pair has retested the July 2025 high near 5.60/5.63, which could act as an interim hurdle; March high at 5.34 and 5.24 are short-term supports."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)