USD/BRL Daily Report · February 25, 2026 · Covering February 24 Session
The Big Three
The real strengthened to R$5.1556 per dollar, its lowest closing level since May 28, 2024, driven by record foreign equity inflows into B3. The real outperformed EM peers including the Chilean peso and Mexican peso as Brazil’s carry trade attractiveness intensified. Year-to-date, the dollar has fallen 6.07% against the real, with Thiago Avallone of Manchester Investimentos citing heavy foreign capital inflows as the primary driver.
Focus Bulletin cuts IPCA to 3.91%, Selic to 12.13%, and USD/BRL year-end to R$5.45 — the seventh consecutive weekly inflation downgrade. The improving inflation picture, with the IPCA now comfortably inside the 4.50% target ceiling, supports a gradual easing cycle that should maintain real rate differentials. GDP was revised up to 1.82% for 2026.
Federal revenue hit a record R$325.8B ($63.2B) in January (+3.56% real YoY), reinforcing fiscal credibility and supporting real appreciation. IOF collections surged 49% after the aliquot hike, while the January trade surplus of $4.34B (exports to China +17.4%) provided additional dollar supply. Josias Bento of GT Capital described Brazil as “one of the safest EM ports” in the current environment.
01Session Data
| Metric | Value | Change |
|---|---|---|
| USD/BRL (spot close) | 5.1556 | −0.27% |
| Session High | 5.1859 | pre-Bovespa open |
| Session Low | 5.1428 | −0.51% intraday |
| USD/BRL Futures (Mar) | 5.1630 | −0.32% |
| DXY | 97.75 | +0.11% |
| 10Y Treasury | 4.03% | −5bp |
| 2Y Treasury | 3.99% | −4bp |
| S&P 500 | 6,890.07 | +0.77% |
| VIX | 19.55 | −6.95% |
| Brent Crude | $71.18 | +0.10% |
| Focus IPCA 2026 | 3.91% | ↓ from 3.95% |
| Focus Selic 2026 | 12.13% | ↓ from 12.25% |
| Focus USD/BRL YE 2026 | 5.45 | ↓ from 5.50 |
02Key Drivers
| Driver | Direction | Detail |
|---|---|---|
| Foreign Equity Flow | BRL+ | R$35.6B ($6.9B) YTD inflows into B3; Ibovespa at record 191,490 |
| Carry Trade | BRL+ | Selic 15% vs Fed 3.50–3.75%; real yield spread widest in EM |
| Fiscal Revenue | BRL+ | Jan revenue record R$325.8B ($63.2B), +3.56% real YoY |
| Focus Inflation | BRL+ | IPCA cut to 3.91% (7th week); supports gradual easing path |
| Section 122 Tariffs | BRL− | 15% tariff formalization pending; avg duty below 2025 peak |
| DXY Strength | BRL− | Dollar +0.11% on yen weakness; partially offset by EM bid |
03Market Commentary
The dollar fell to R$5.1556, its lowest close since May 28, 2024, as foreign equity inflows continued to dominate the FX market. The pair opened slightly higher at R$5.1859 before the Bovespa open, but once the equity session began and the Ibovespa cleared 191,000 for the first time, the real strengthened steadily, reaching an intraday low of R$5.1428. March dollar futures closed at R$5.1630, down 0.32%.
The real’s outperformance was notable given the DXY’s modest 0.11% gain on Tuesday, driven by yen weakness. The real not only held firm but appreciated against the dollar, outperforming EM peers including the Chilean peso and Mexican peso. Thiago Avallone of Manchester Investimentos attributed the move to heavy foreign capital inflows, while Josias Bento of GT Capital highlighted Brazil’s relative safety among emerging markets compared to South Africa, Turkey, and Mexico.
Macro fundamentals are firmly supportive. The Focus Bulletin released Monday cut the IPCA forecast to 3.91% for the seventh consecutive week, lowered the Selic year-end projection to 12.13% (from 12.25%), and — crucially — cut the USD/BRL year-end forecast from R$5.50 to R$5.45 for the first time. Federal revenue in January hit a record R$325.8B ($63.2B), up 3.56% in real terms, with IOF collections surging 49% after the aliquot hike. The trade surplus of $4.34B in January, boosted by a 17.4% increase in exports to China, provided additional dollar supply.
The carry trade remains the dominant structural force. With the Selic at 15% and the Fed funds rate at 3.50–3.75%, Brazil offers the widest real yield differential in EM. The potential refund of $180B in IEEPA tariff overpayments flowing back into the global financial system, noted by Trading Economics, could further reduce dollar demand and benefit EM currencies. The DI curve fell across all tenors on Tuesday, reflecting easing expectations and reinforcing the bullish real narrative.
04Technical Analysis
Daily (1D):
USD/BRL closed at 5.1522 (ICE), pressing against the lower Bollinger Band at 5.1442. The pair remains well below both the Tenkan-sen at 5.1962 and Kijun-sen at 5.2272, which now act as immediate resistance. The Ichimoku cloud spans 5.2579–5.3300 overhead, a massive resistance zone that would require a significant reversal in sentiment to penetrate. The 200-day SMA at 5.5000 sits 6.8% above current levels, underscoring the parabolic nature of the real’s rally.
Momentum indicators are deeply oversold. The RSI reads 36.97 (fast) and 32.12 (slow), with the slow line approaching the 30 oversold threshold — historically a level that has preceded at least temporary dollar rebounds. The MACD lines at −0.0396/−0.0397 are nearly converged, with the histogram at −0.0001 essentially flat, suggesting that downward momentum in the pair has stalled even as price continues to drift lower. A technical bounce toward the Tenkan at 5.1962 is overdue; a break below the BB lower at 5.1442 would target 5.10 and the May 2024 low near 5.08.
| Level | Price | Reference |
|---|---|---|
| Resistance 3 | 5.3300 | Cloud top (Senkou Span B) |
| Resistance 2 | 5.2272 | Kijun-sen |
| Resistance 1 | 5.1962 | Tenkan-sen |
| Pivot | 5.1556 | Spot close |
| Support 1 | 5.1442 | BB lower |
| Support 2 | 5.1000 | Psychological level |
| Support 3 | 5.0800 | May 2024 low zone |
05Forward Look
Copom Minutes and Easing Trajectory.
The market is pricing a gradual easing cycle from 15% toward 12.13% by year-end. Any hawkish surprise in upcoming Copom communications could temporarily boost the real further by reinforcing the carry premium. Conversely, a dovish pivot faster than expected could narrow the rate differential and trigger profit-taking in BRL positions.
Section 122 Tariff Formalization.
The Trump administration’s formal executive order raising Section 122 tariffs to 15% is pending. While the average duty on Brazilian exports remains below 2025 peak levels, any sector-specific escalation could disrupt the benign trade backdrop. The potential $180B in IEEPA tariff refunds could offset some headwinds by reducing global dollar demand.
EM Rotation Sustainability.
The R$35.6B ($6.9B) YTD foreign equity inflow is the sine qua non of real strength. Any reversal in the global rotation from U.S. growth to EM value would immediately pressure USD/BRL higher. The RSI at 32.12 on the slow line suggests the pair is technically oversold, raising the probability of a near-term bounce even if the structural trend remains BRL-positive.
Verdict
The real’s advance to R$5.15 is a structural move driven by the most powerful foreign flow in B3’s history, amplified by a record Selic of 15% and improving inflation dynamics. The Focus Bulletin cutting the year-end USD/BRL forecast to R$5.45 for the first time confirms that the market consensus is shifting in favor of sustained real strength.
Technically, however, the pair is extended. The RSI slow line at 32.12 is approaching oversold territory, the MACD histogram is flat, and price is pressing against the lower Bollinger Band. This configuration typically precedes a mean-reversion bounce toward the Tenkan at 5.1962 or the Kijun at 5.2272 before the downtrend resumes.
The risk to the bullish-BRL thesis is a reversal in EM equity rotation or an escalation in Section 122 tariffs that disrupts the trade surplus. But absent those catalysts, the carry trade math (15% Selic vs. 3.50–3.75% Fed), record fiscal revenue, and persistent foreign inflows argue for sub-R$5.15 before the end of Q1. The trend is your friend — but don’t chase the oversold bounce.
Bias: BULLISH BRL · structural downtrend in USD/BRL intact, but tactically oversold — expect bounce before next leg lower