Dollar Slides as Real Gains and Dollar Index Falters on Interest Rate Bets

Brazil’s real advanced to 5.4160 per US dollar early on Friday, marking the fifth consecutive day of gains. Official sources put the spot price near this level as markets opened.

This move came after US President Donald Trump introduced new tariffs targeting semiconductor imports and Indian products, with expectations for further trade measures against Russia weighing on sentiment.

During the last 24 hours, a shift in global currency markets became clear. The US Dollar Index (DXY) slipped to around 98.13, reflecting modest dollar weakness against a basket of major peers.

This index, which tracks the dollar versus leading currencies such as the euro and pound, declined despite persistent uncertainty. Most market participants cited growing speculation that the Federal Reserve will cut rates as soon as September.

Atlanta Fed President Raphael Bostic signaled openness to this move, while insisting that policymakers require more economic data before any rate adjustment.

Capital flows responded to these expectations. Investors in Brazil gravitated toward fixed income assets, encouraged by the country’s 15% Selic rate and steady central bank communications.

Brazil’s equity volumes fell over 60% from the previous session, as institutional investors prioritized yield and safety over risk assets. Technical analysis shows the dollar in a defined bearish trend against the real.

On the daily chart, USD/BRL trades below all key moving averages, including the 21-, 50-, 100-, and 200-period lines. The MACD line is negative and continues to fall, consistent with the direction of the trend.

The RSI hovers under 40, edging toward oversold territory. Bollinger Bands constrict at the price’s lower limit, a signal of sustained volatility and potential for a short-term turning point. Key support stands at 5.41, with the next resistance near 5.48.

Four-hour charts confirm this picture. Indicators such as MACD and RSI mirror daily chart signals, underlining the market’s bearish tone. RSI dropped to near 16, indicating short-term exhaustion.

Volume analytics confirm the low risk appetite prevailing overnight. The Global Liquidity Index, visible as a yellow line on both charts, depicts marked volatility in cross-asset flows.

Despite these tremors, liquidity swings did not disrupt the trend of dollar weakness or real strength. Brazilian officials avoided escalation in response to US tariff actions, reiterating a preference for dialogue over retaliation.

This approach kept risk at bay and encouraged continued buying of local assets from international investors. In summary, investors responded to both technical and macroeconomic signals as well as official statements in the past day.

The real appreciated further, while the dollar and its index drifted lower, amid anticipation of lower US rates and selective global liquidity seeking higher yields. The direction for both currencies now hinges on near-term signals from policymakers in Washington and Brasília.

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.