Dollar Climbs to R$5.75: Haddad’s Fiscal Comments and Trump Tariffs Drive Real Lower

The USD/BRL exchange rate stands at 5.75 this morning, extending its upward movement as market participants digest recent comments from Finance Minister Fernando Haddad and anticipate the release of Copom minutes later today.

The dollar has strengthened against the real for two consecutive sessions, though it still completed its third week of declines overall. The Brazilian real has lost ground since yesterday when the USD/BRL pair closed at 5.7524, up 0.61% from the previous session.

This continues the corrective move that began after the real reached its strongest position of 2025 on March 19, when the USD/BRL touched 5.6496. Yesterday’s session saw the dollar strengthen after initial comments from Finance Minister Haddad created uncertainty in the market.

Though he later clarified his statements, saying they were “distorted,” his initial remarks that fiscal framework parameters “could be changed” triggered a negative market reaction.

Overnight Trading

Asian and European sessions maintained the dollar’s momentum, with limited liquidity as traders awaited key data releases and central bank communications. The USD index (DXY) continued its ascent, gaining 0.21% yesterday to reach 104.302 points, providing tailwinds for USD/BRL.

Key Market Drivers

Domestic Factors

Brazil’s monetary policy stance remains a key support for the real despite recent volatility. The Copom‘s decision last week to raise the Selic rate to 14.25% marked the third consecutive hike as authorities combat persistent inflation.

“The market is keenly awaiting the Copom minutes today for clarity on the forward path of interest rates,” notes Carlos Silva, FX strategist at Itaú Unibanco. “While the statement indicated another hike in May, traders want details on the size and terminal rate expectations.”

The economic team’s fiscal credibility came under scrutiny yesterday after Haddad’s comments. “The market remains hypersensitive to any perceived deviation from fiscal discipline,” explains Marcelo Santos, chief economist at BTG Pactual. “Even with the clarification, some damage was done to sentiment.”

External Factors

President Trump’s recent comments on tariffs have added a layer of uncertainty to global markets. His announcement that countries purchasing oil or gas from Venezuela would face a 25% tariff on US transactions sparked concerns about broader trade tensions.

“Trump’s tariff rhetoric is creating headwinds for emerging markets broadly, not just Brazil,” says Ana Costa, emerging markets strategist at Bradesco. “His comments about future tariffs on automobiles, aluminum, and pharmaceuticals have particularly rattled markets.”

Market Maker Quotes

Banco do Brasil Trading Desk (09:15 AM):

“We’re seeing USD/BRL bids around 5.74-5.75 this morning. Real continues to face pressure as markets digest Haddad’s comments. Volumes picking up ahead of Copom minutes.” (Price: ~R$5.747, Volume: Moderate-High)

Itaú Unibanco FX Desk (09:30 AM):

“Offers are thin above R$5.76. The interest rate differential remains supportive for the real longer-term, but near-term concerns about fiscal policy are dominating sentiment.” (Price: ~R$5.752, Volume: High)

Volumes and Fund Flows

Yesterday’s USD/BRL spot market saw volumes of approximately $10-12 billion, slightly below the previous session but still above the 30-day average of $10 billion. This elevated activity reflects the market’s sensitivity to fiscal policy developments and external factors.

ETF flows show signs of caution, with Brazilian-focused ETFs recording modest outflows of approximately $15 million over the past 24 hours, reversing some of the $50 million inflows seen last week.

Technical Analysis

From a technical perspective, the USD/BRL has breached the 20-day exponential moving average at 5.7514, which had been acting as resistance. The pair appears to be in a short-term corrective uptrend within a broader bearish cycle.

“The technical picture shows the 5.75 level as the immediate resistance, with 5.80 being the next significant level to watch,” notes Paulo Oliveira, technical analyst at BR Capital. “If today’s Copom minutes are perceived as dovish, we could see acceleration toward 5.85.”

The 5.70 level provides immediate support, with stronger support at the March 19 low of 5.6496.

Outlook

Market participants remain focused on today’s Copom minutes for clarity on Brazil’s monetary policy path. While the interest rate differential continues to make Brazil an attractive carry trade destination, fiscal concerns and external factors are creating headwinds for the real in the near term.

The consensus among analysts suggests the USD/BRL could trade in the 5.70–5.80 range this week. Directional cues are expected from both domestic policy developments and Trump’s tariff announcements.

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