USD / BRL Daily Report · February 26, 2026 · Covering February 25 Session
The Big Three
Dollar drops to R$5.1247, its lowest close since May 21, 2024 — fifth consecutive session of BRL strength. The real gained 0.60% against the greenback as the DXY eased 0.15% to 97.69 and global risk appetite improved ahead of Nvidia’s after-hours earnings. The session low touched R$5.118, briefly piercing the May 2024 floor before settling.
Foreign inflows to B3 now total ~R$38 billion YTD, crushing 2025’s full-year R$25.4 billion in under two months. Nomad’s Bruno Shahini cited the carry-trade differential (Selic 15% vs. Fed 3.50–3.75%) and the ongoing global rotation toward high-yield EM assets as the primary drivers sustaining dollar supply in the local market.
Election narrative and SCOTUS tariff ruling compress risk premiums — real benefits from twin catalysts. AtlasIntel/Bloomberg polling shows Flávio Bolsonaro numerically tied with Lula in a second-round scenario, bringing a perceived pro-market candidate into contention. Separately, the Supreme Court’s striking down of Trump’s IEEPA tariffs was digested positively, with the new 10% Section 122 tariff seen as less punitive for EM exporters.
01Session Data
| Metric | Value | Change |
|---|---|---|
| USD/BRL (spot close) | 5.1247 | −0.60% |
| Session Low | 5.118 | intraday floor |
| USD/BRL Futures (Mar) | 5.1265 | −0.70% |
| DXY | 97.69 | −0.15% |
| Selic Rate | 15.00% | unchanged |
| Fed Funds Rate | 3.50–3.75% | unchanged |
| Rate Differential | ~11.25% | carry positive |
| S&P 500 | 6,948.26 | +0.81% |
| VIX | 17.93 | −8.29% |
| Brent Crude | $70.85 | +0.11% |
| B3 Foreign Inflows YTD | ~R$38B | vs R$25.4B full ’25 |
| Jan Fiscal Surplus | R$86.9B | record for month |
02Key Drivers
| Factor | Direction | Detail |
|---|---|---|
| Carry Trade | BRL+ | Selic 15% vs Fed 3.50–3.75% = ~11.25% spread attracts flow |
| Foreign Inflows | BRL+ | ~R$38B YTD equity inflows; global EM rotation accelerating |
| DXY Weakness | BRL+ | Dollar index −0.15% to 97.69; SCOTUS tariff ruling weighing |
| Election Polling | BRL+ | Bolsonaro-Lula tied in 2nd round; pro-market candidate narrows risk premium |
| Fiscal Surplus | BRL+ | R$86.9B January surplus (largest ever for month) reinforces fiscal narrative |
| Iran-US Talks | Neutral | Pezeshkian sees “good outcome”; Geneva round Thursday — risk-off if fails |
03Market Commentary
The real punched through to May 2024 territory for the second time in three sessions, with USD/BRL closing at R$5.1247 — the lowest daily close since May 21, 2024 (R$5.1163). The session low touched R$5.118, briefly breaking the prior reference floor before settling higher. This was the fifth consecutive day of BRL appreciation, extending a trend that has cut the dollar 6.6% year-to-date. Dollar futures for March delivery fell 0.70% to R$5.1265.
The move was powered by a confluence of structural and cyclical tailwinds. Nomad’s Bruno Shahini attributed the session’s strength to an improved international risk environment, with global equity indices rising broadly (S&P 500 +0.81%, Nasdaq +1.26%) and the VIX collapsing 8.3% to 17.93 — its first close below 18 since early February. He noted that foreign inflows to B3 have now reached approximately R$38 billion since January, drawn by the carry differential and the global rotation toward high-yield emerging markets. The DXY slipped 0.15% to 97.69, extending its post-SCOTUS tariff-ruling weakness.
The domestic catalysts were equally supportive. The Treasury reported a January primary surplus of R$86.9 billion — the largest ever recorded for the month — reinforcing the narrative that Brazil’s fiscal accounts are stabilizing despite the government’s spending trajectory concerns. The Atlas/Bloomberg poll released Wednesday morning showed President Lula tied with Senator Flávio Bolsonaro in second-round scenarios for October 2026, which the market interpreted positively. As Nomad’s Shahini observed, the perception of greater equilibrium in the electoral race has compressed risk premiums, sustaining flow toward local assets.
StoneX analyst Lucca Bezzon pointed to the tariff context as an underappreciated tailwind. The actual 10% rate implemented by CBP on Tuesday — rather than the 15% Trump announced on Truth Social — was perceived as less punitive for EM exporters than feared. Bezzon noted that the reduced tariff rate has been driving currency and equity appreciation in emerging markets, “particularly economies with higher interest rates and attractive returns, such as Brazil.” Iran-US nuclear talks in Geneva on Thursday add a geopolitical wildcard — a positive outcome could further compress oil risk premiums, while failure could trigger a flight to safety.
04Technical Analysis
Daily (1D):
The daily chart shows USD/BRL in a powerful downtrend that has now broken below the Ichimoku cloud and the lower Bollinger Band, signalling a sustained bearish structure for the dollar. The close at 5.1247 sits well below the Tenkan-sen (~5.1253) and far from the Kijun-sen at 5.2227, which has become the first meaningful resistance zone. The Ichimoku cloud overhead spans approximately 5.2874 to 5.3215 — the pair would need to reclaim this entire zone to neutralize the bearish bias. The 200-day SMA at 5.4127 is a distant 5.6% above the current price, underscoring the severity of the BRL appreciation trend.
Momentum indicators are flashing deeply oversold conditions. The RSI reads 28.96 (fast) — firmly in oversold territory below 30 — with the slow RSI at 36.21. This level of oversold reading typically precedes at least a technical bounce, though in trending markets, the RSI can remain oversold for extended periods. The MACD lines at −0.0408/−0.0440 are deeply negative, though the histogram at −0.0032 is nearly flat, suggesting the velocity of the decline is decelerating. A MACD histogram crossover to positive territory would be the first signal of mean-reversion potential.
The Bollinger Bands show the pair trading at or below the lower band, with the midline at 5.2063 — any technical reversion toward the mean would target this level as a first objective. The band width remains wide, consistent with a trending (not consolidating) market. The session low at 5.118 represents the most aggressive downside probe; if that level breaks convincingly, there is little horizontal support until the 5.05–5.08 zone from early 2024.
| Level | Price | Reference |
|---|---|---|
| Resistance 3 | 5.3215 | Upper Ichimoku cloud (Senkou Span) |
| Resistance 2 | 5.2227 | Kijun-sen (26-period baseline) |
| Resistance 1 | 5.2063 | Bollinger midline (20-SMA) |
| Pivot | 5.1247 | Feb 25 close |
| Support 1 | 5.118 | Session low (Feb 25) |
| Support 2 | 5.1163 | May 21, 2024 close (prior reference) |
| Support 3 | 5.05–5.08 | Early 2024 horizontal support zone |
05Forward Look
Carry Compression Timeline.
The Copom is expected to begin cutting the Selic from March, with Focus consensus targeting 12.25% year-end. The Fed, under incoming Chair Kevin Warsh, currently prices three cuts for 2026. The carry differential will narrow from both sides — the question is speed. A faster Copom easing cycle would erode the carry advantage that has been the primary driver of BRL strength, potentially triggering a reversal toward the Focus consensus of R$5.50 year-end.
Iran-US Geneva Round.
The third round of nuclear negotiations between Iran and the US takes place Thursday in Geneva. Trump envoy Steve Witkoff and Jared Kushner will meet Iran’s Foreign Minister Araqchi. A positive outcome could ease Brent risk premiums and further support EM currencies; a breakdown — or a US military escalation — would trigger a flight to safety that could quickly unwind the BRL’s oversold positioning.
Election Risk Horizon.
The October 2026 election is the medium-term wildcard for BRL. The Bolsonaro-Lula dead heat introduces a binary outcome for fiscal and reform expectations. Morgan Stanley targets R$5.60 in Q3 on election volatility. Any fiscal slippage in H2 — or a Lula polling surge that removes the pro-market candidate from contention — could accelerate repricing of the currency toward the Focus consensus.
Verdict
The real is in the grip of a powerful appreciation trend that shows few signs of exhaustion despite deeply oversold technicals. Five consecutive sessions of gains, R$38 billion in YTD foreign inflows, a record January fiscal surplus, and the first credible pro-market challenger in October polling have created a near-perfect storm for BRL bulls. The dollar’s May 2024 floor has been tested and broken intraday.
But the RSI at 28.96 is a warning. Oversold conditions this extreme have historically produced at least a technical bounce toward the Bollinger midline (5.2063) or the Kijun-sen (5.2227) before the trend resumes. A dead-cat bounce of 1.5–2% from these levels would be entirely normal and constructive for the longer-term trend. The VIX collapse to 17.93 and the 10% tariff implementation (rather than 15%) have compressed implied volatility, reducing the cost of hedging BRL positions — which paradoxically can accelerate the trend as positioning becomes more one-directional.
The structural risk is the carry compression. Copom cuts from March, the FOMC’s uncertain pace, and election-driven fiscal uncertainty in H2 will all work to erode the ~11.25% spread that underpins the current flow dynamic. Focus consensus at R$5.50 year-end implies a 7.3% depreciation from here — the market is pricing in that the carry trade unwinds. The question is whether the positioning overshoot continues toward 5.05 before it reverses, or whether the mean-reversion happens sooner.
Bias: BRL BULLISH · trend intact but RSI 29 warns of imminent technical bounce — buy dips in BRL, don’t chase