USD/BRL is under pressure after it couldn’t break July’s high of 5.63 and has fallen below the 50-day moving average. It’s now testing a key support zone between 5.39 and 5.37, which matches the lows from September 2024. If this level breaks, there’s a risk of further decline. Although there might be a short-term bounce, if the rate doesn’t recover to 5.51, it could indicate more downside ahead. A clear break below the 5.39/5.37 support could lead to more significant losses, with the next support levels around 5.29 and projections reaching 5.20. This analysis includes forward-looking statements that come with risks and uncertainties. It’s important to do thorough research before making any financial decisions. The information provided is for informational purposes only and does not recommend buying or selling assets. Investing in markets can lead to capital loss and emotional stress. All risks, costs, and losses are the investor’s responsibility. Please verify all details since we cannot guarantee accuracy or timeliness. This content does not give personalized advice, and we do not take responsibility for any errors or omissions. We are closely watching the USD/BRL pair as it tests an important support level. After struggling to stay above 5.60 last month, the rate is now exploring the 5.39/5.37 area, a critical support level we last saw in September 2024. If it breaks below this zone, it could indicate the downtrend has more to unfold. This weakness is also supported by fundamental factors from earlier this month. Brazil’s inflation report for July was released on August 8, 2025, showing a manageable 3.7% year-over-year. This supports the Central Bank of Brazil in maintaining its high Selic interest rate of 10.5%, making the Brazilian Real appealing for carry traders. On the USD side, the Federal Reserve indicates a pause in its rate cycle, while July 2025 non-farm payrolls data reveals a cooler labor market. This disconnect in central bank policies adds pressure on the USD/BRL exchange rate. For traders expecting a breakdown, buying put options with strike prices at or below 5.35 could be an effective strategy. This offers a defined-risk opportunity to profit if the rate moves toward the 5.29 and 5.20 support levels. Defined risk is especially valuable due to the pair’s history of sharp reversals. For those more cautious, a bear call spread may work well. By selling a call option near the 5.51 resistance and buying a higher-strike call for protection, traders can profit if the pair stays below this key resistance level in the coming weeks. This strategy benefits from price drops and time decay. It’s also essential to consider that the current tension at the 5.37 support could lead to increased volatility. Implied volatility on BRL options has already risen in early August. If a trader expects a big move but is unsure of the direction, a long straddle could be used to benefit from significant shifts either up or down. Any bounce that fails to reclaim the 5.51 level should be viewed critically. This level acts as a clear boundary for our bearish perspective. A sustained move above it would signal that downward momentum has softened, prompting a reassessment of our positions.

here to set up a live account on VT Markets now