Real Firms As Dollar Softens On U.S. Shutdown Progress; Charts Point To Downtrend

The Brazilian real strengthened again early Tuesday, with spot USDBRL hovering near 5.29 after Monday’s close around 5.31.

Investors pared defensive dollar positions as Washington inched toward a deal to end the record U.S. government shutdown, easing global risk aversion and nudging emerging-market currencies higher.

Overnight, the dollar index drifted near recent lows after the U.S. Senate advanced a stopgap bill to fund the federal government through January 30.

The measure still requires House approval and presidential sign-off, but the prospect of reopening federal services helped unwind safe-haven flows that had supported the greenback.

In commodities, Brent crude traded around $64 a barrel, offering a modest tailwind for risk appetite. At home, the policy backdrop remains firm.

Brazil’s Central Bank last week kept the Selic rate at 15.00% for a third consecutive meeting and signaled patience, reinforcing the country’s carry appeal while inflation expectations remain contained.

Real holds mild edge amid policy cues

Markets are also watching October’s IPCA print and minutes from the latest Copom meeting for clues on the length of the pause. The Focus survey kept 2025 inflation forecasts near 4.55%.

Diplomacy also sits on traders’ dashboards: Foreign Minister Mauro Vieira is due to meet U.S. Secretary of State Marco Rubio at this week’s G7 gathering in Canada, part of a broader effort to steady ties and coordinate on growth and security.

Such engagement—plus progress toward predictable budgeting in Washington—generally favours investors who prize rules, discipline and clear incentives.

Technically, the four-hour USDBRL chart shows price hugging the lower Bollinger band with an oversold RSI, leaving room for brief rebounds toward 5.31–5.34.

The daily chart, however, keeps the broader trend lower: spot sits beneath a falling 200-day average near 5.37, with momentum still negative.

A decisive close below 5.28 would expose 5.25–5.22; topside, 5.34–5.40 is stiff resistance unless U.S. headlines flip back in the dollar’s favour.

Bottom line: as shutdown optimism tempers the greenback and Brazil’s high carry stays intact, the bias tilts mildly in the real’s favour.

Any stumble in Washington—or a surprise hawkish turn abroad—could quickly cap the move and return USDBRL to the 5.34–5.40 range.

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