Dollar plunges nearly 1% to R$5.1766 — its lowest close since late May 2024 — as the Supreme Court’s tariff ruling triggered a global rush into risk assets. The real outperformed most EM peers despite the DXY barely moving (−0.04% to 97.80). In the shortened Carnival week, the dollar fell 1.03%. Year-to-date, the greenback has lost 5.69% against the real.
DI futures rates fell across the entire curve — Jan/28 at 12.54% (−7bp), Jan/35 at 13.38% (−6bp) — as the tariff removal reduced global trade risk and supported EM assets. The curve flattening reflects both improving risk sentiment and the approach of March’s expected 50bp Copom cut. Dollar futures for March fell 0.77% to R$5.1840.
Trump’s immediate counterpunch — a new 10% global tariff via Section 122 (limited to 150 days without Congressional approval) — failed to reverse the dollar’s decline. Paula Zogbi of Nomad noted the SCOTUS ruling eliminates a potential revenue source for US fiscal consolidation, which may actually pressure longer-term US rates. FedWatch odds for a June hold rose to 46.2% (from 41.4%).
Session Data
| Asset | Price | Change |
|---|---|---|
| USD/BRL (spot close) | R$5.1766 | −0.99% |
| USD/BRL (ICE daily) | R$5.1763 | −0.65% |
| Session Range | R$5.1734 – R$5.2229 | R$0.050 range |
| Dollar Futures (Mar) | R$5.1840 | −0.77% |
| DXY | 97.80 | −0.04% |
| DI Jan/2028 | 12.54% | −7bp |
| DI Jan/2035 | 13.38% | −6bp |
| Selic | 15.00% | unchanged |
| Fed Funds | 3.50–3.75% | unchanged |
| Carry Spread (Selic − Fed) | ~11.25% | wide |
| 10Y UST Yield | 4.086% | +1bp |
| BRL Performance | Wk: −1.03% / YTD: −5.69% | $ losing ground |
Market Commentary
The SCOTUS tariff ruling was the session’s unambiguous catalyst. The dollar dropped nearly 1% against the real in a single session — the sharpest daily decline since the January rout — as the Supreme Court’s 6–3 decision invalidated IEEPA tariffs and removed one of the largest overhangs on global trade. The real broke below R$5.20 support decisively, closing at R$5.1766, its lowest since late May 2024. This is part of The Rio Times’ daily coverage of the Brazilian real exchange rate and Latin American financial markets.
The ruling’s impact on Brazil was amplified by the DI curve’s response: the entire yield curve shifted lower, with Jan/28 falling 7bp to 12.54% and Jan/35 down 6bp to 13.38%. This reflects two forces — reduced global trade risk supporting EM assets, and the approaching March Copom meeting where a 50bp cut to 14.50% is fully priced. Dollar futures for March fell 0.77% to R$5.1840, confirming forward-looking conviction in real strength.
The US side told a more complex story. Treasury yields rose modestly (10Y +1bp to 4.086%) as the tariff removal creates a fiscal gap — the IEEPA tariffs had been generating ~$20 billion monthly, and their invalidation eliminates roughly three-quarters of the administration’s tariff revenue pipeline. FedWatch odds shifted slightly toward holding in June (46.2% vs 45.6% for a cut), reflecting the core PCE surprise at 3.0% and weak GDP at 1.4%.
Trump’s Section 122 counterpunch (a 10% global tariff, limited to 150 days without Congressional extension) failed to reverse the move. Markets appear to assess this mechanism as legally fragile and economically modest compared to the IEEPA regime. Bruno Shahini of No
Technical Analysis
USD/BRL — Daily (TradingView, Feb 21 07:43 UTC, ICE): O: 5.2104 / H: 5.2229 / L: 5.1734 / C: 5.1763 (−0.0341, −0.65%). A large bearish candle that sliced through the 5.20 support level, closing near the session low. This is the most decisive daily decline of February and breaks the consolidation range that held since Feb 10.
Ichimoku remains decisively bearish for the dollar (bullish for the real). Price at 5.1763 sits well below the Tenkan-sen (5.2426), Kijun-sen (5.2807), and the entire cloud (5.3493–5.3805). The 200-SMA at 5.4232 is now 4.8% above spot — a widening gap that confirms the structural downtrend’s acceleration. The entire Ichimoku stack slopes downward with no sign of base formation.
MACD is bearish but continues to improve: the line (−0.0359) sits above the signal (−0.0405), with the histogram at +0.0047. While the histogram has narrowed slightly from yesterday’s +0.0070, it remains positive for the second consecutive day, indicating waning downward momentum even as price makes new lows. This divergence (improving MACD with new price lows) is worth monitoring.
RSI at 38.22 (signal 35.21) has dropped from 40.55, approaching oversold territory. The 30 level is the key threshold — a breach would signal extreme dollar weakness and potential mean-reversion risk. Key dollar support: 5.1734 (session low), 5.1590 (Bollinger lower band), then 5.1539 (May 2024 close low). Resistance: 5.2083, 5.2426 (Tenkan-sen), 5.2807 (Kijun-sen).
| Level | Rate | Source |
|---|---|---|
| $ Resistance 3 | 5.3805 | Cloud upper boundary |
| $ Resistance 2 | 5.2807 | Kijun-sen |
| $ Resistance 1 | 5.2426 | Tenkan-sen |
| Spot | 5.1766 | Feb 20 close |
| $ Support 1 | 5.1734 | Session low |
| $ Support 2 | 5.1590 | Bollinger lower band |
| $ Support 3 | 5.1539 | May 2024 closing low |
Forward Look
SCOTUS fiscal fallout: The tariff invalidation eliminates ~$1.4 trillion in projected 10-year revenue. Refund claims could reach $175 billion. This widens the US fiscal gap and may structurally weaken the dollar — a tailwind for EM currencies including the real. Section 122’s 150-day limit makes it a temporary patch, not a replacement.
Copom March cut: The 50bp cut to 14.50% is fully priced. The carry spread narrows from ~11.25% to ~10.75% — still extraordinarily wide by global standards. The easing cycle’s pace will determine whether BRL strength has legs into H2. Focus consensus remains R$5.50 year-end.
May 2024 lows in sight: The dollar is now within 0.5% of its May 2024 closing low at R$5.1539. A break below this level would mark the strongest real since spring 2024 and could trigger additional momentum selling. RSI approaching 30 means a bounce is statistically due, but structurally the flow dynamics support further real strength.
Election calendar + fiscal: Oct 4 first round. Morgan Stanley projects R$5.60 in Q3 on election volatility, recovering to R$5.30 year-end. The gap between current spot (R$5.18) and consensus year-end (R$5.50) implies ~6% depreciation over the next 10 months — but this has been the consensus miss all year.
The SCOTUS ruling didn’t just remove tariffs — it removed $1.4 trillion in US revenue projections. That’s structural dollar weakness, and the real is catching every dollar that falls.
R$5.1766 is the lowest dollar close since May 2024. The move below R$5.20 was technically significant — the consolidation floor that held for two weeks has been shattered. The dollar is now down 5.69% YTD against the real, with January’s 4.40% decline and February adding another 1.33%. The structural driver remains unchanged: R$33B+ in foreign equity inflows, a 15% Selic that commands an 11.25% carry spread, and an EM rotation trade that shows no sign of exhaustion.
The SCOTUS ruling adds a new dimension: the fiscal gap from tariff invalidation structurally weakens the dollar’s position. The US now faces wider deficits without tariff revenue and potential $175B in refund obligations. For the real, this is unambiguously supportive — a weaker dollar combined with elevated Brazilian rates and persistent foreign flows.
Technical bias: BRL Bullish ($ bearish) below 5.2083; Neutral 5.2083–5.2807; BRL Bearish ($ bullish) above 5.2807 (Kijun).
For B3 equity market context, see The Rio Times’ Ibovespa session report for the same date.
For the macro context, see Brazil’s Morning Call for the same date.