Dollar Holds Ground as U.S. Tariffs Hit Brazil and Fed Stays Defensive

Official statements and price data set the tone for the dollar-real exchange over the past 24 hours. U.S. and Brazilian authorities confirmed the imposition of 50% tariffs on Brazilian products entering the United States, exempting more than 1,000 key goods.

At the same time, both the Federal Reserve and the Central Bank of Brazil left their interest rates unchanged, keeping U.S. rates at 4.25%–4.50% and Brazilian rates at 15%.

Traders observed the spot rate for USD/BRL close at 5.5892, a 0.35% daily gain, after swinging as high as 5.63 during the session.

The U.S. dollar gained momentum against the real right after the tariff news broke and rose again following the Fed’s decision, indicating heightened demand for dollar assets.

The Federal Reserve’s decision split its board. Two members favored a rate cut, but the majority opted to hold rates steady, signaling caution given mixed economic data.

U.S. employment grew by 104,000 private-sector jobs last month, surpassing estimates and suggesting resilience in the economy. Yet, this strength dampened expectations for immediate rate cuts and spurred further dollar strength.

The dollar index (DXY) tracked these movements, reaching above 99.8, reaffirming its position as a benchmark of risk aversion.

Flows into U.S. bond exchange-traded funds increased, while equity ETFs registered outflows, showing that investors favored safer assets during policy uncertainty.

On the technical front, commonly used indicators on both daily and 4-hour charts provide insight. The daily chart reveals a prolonged sideways trend for USD/BRL over July.

Price action stays confined between support at 5.52 and resistance around 5.58–5.60. The Relative Strength Index (RSI) recovers from oversold levels and shows mild upward momentum without approaching overbought territory.

The Moving Average Convergence Divergence (MACD) indicator hovers around the neutral line, indicating indecision. Bollinger Bands contract as volatility drops but remain alert for the possible breakout.

Volume data shows little conviction, which matches the consolidating price action. The 4-hour chart mirrors these findings. Candlesticks oscillate in a narrow band, and short-term moving averages cluster tightly with limited slope.

The Global Liquidity Index NDQ, depicted by the yellow line, falls back from recent highs, signaling a reduction in excess global liquidity. This shift can remove support for riskier assets and adds pressure on the real.

No major deviations appeared in volume, and ETF inflows and outflows followed the risk-off signal suggested by heightened policy risk and the tariff announcement.

Support and resistance levels remain active and cap price swings, with buyers stepping in at 5.52 and sellers around 5.58–5.60. Over the last day, macroeconomic and fundamental catalysts eclipsed local developments.

The new tariffs, strong dollar, and cautious central bank actions drove a defensive market tone. Investors and traders responded by seeking safety and preparing for more volatility in the days ahead.

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