Sluggish growth forecasts, coupled with waning support for the Brazilian President has sent the Brazilian Real to its lowest level of the year thus far. The sharp declines have also been fueled by uncertainty over the US-China trade talks on the macro level. The combination of the two forces, the external macro headwinds and feeble domestic economy, have been a perfect storm for the under-performance of the $USDBRL in 2019.
Further more, on a technical basis, the $USDBRL continues to show deterioration within the Brazilian Real, with the 10-day being a strong support for the currency pair.
We believe if this continues, $USDBRL 4.25 is the next stop.