The Brazilian real posted a bearish close to January, finishing at 0.1830 as it continued to pull back from its December high of 0.19925. Though still oversold, as indicated by monthly stochastics near or below 20%, it looks like the real could build bearish momentum as February gets under way, with initial support at the 4-month low of 0.17218 (October2020). How does this fit into all the Monthly Analysis posted so far today (January 31).

  • The real looks like it could go down at the same time as the US dollar index established a long-term bullish reversal pattern.
  • If the US dollar strengthens, it could start to slow recent buying interest of US commodities and increase interesting in new Brazilian supplies
    • Brazil’s soybean harvest should get rolling during February
  • Recall the cash index for US soybeans established what looks to be, from a technical point of view, a potential Wave 5 top to its major uptrend.

Of course these are just some of the possibilities ahead as we make our way into February, but this particular set seems to fit together technically. Fundamentally is another story.