Brazilian Real: Politics key to post-ambush outlook – Societe Generale

An 8.5% drop has left the Brazilian Real under severe pressure. Societe Generale strategists attribute the decline to the unwinding of long positions, with trading set to resume at 5.4155. The pair has retested the July 2025 high near 5.60/5.63, an interim hurdle, while March support levels stand at 5.34 and 5.24. The strategists emphasise that the next finance minister and the fiscal policy stance will be crucial.

5.4155: BRL Set to Reopen 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."

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