Warsh Nomination Lifts The Dollar, But January Still Belongs To The Real

Key Points

• USD/BRL rebounded late in the week on a Fed leadership signal and higher DXY.
• The pair still finished January down about 4.4% against Brazil’s real.
• Charts show a short-term bounce inside a broader downtrend that has not been repaired.

The dollar found its footing at the end of the month after weeks of steady losses. On Friday, USD/BRL closed at R$5.2476, up 1.04%, after President Donald Trump indicated Kevin Warsh as his choice to lead the Federal Reserve.

The move came with a stronger dollar abroad. The DXY index rose about 0.73% to 97.013 late in Brazil’s session.

Even with that bounce, January remained a clear win for the real. The dollar finished the month down 4.40% versus Brazil’s currency. A cleaner policy signal helped.

Investors read Warsh’s selection as lower political tail risk and a sign that aggressive rate cuts are less likely.

That interpretation supports higher U.S. yields at the margin. It can also tighten financial conditions for emerging markets in the short run.

Geopolitics added noise. Trump said a larger U.S. armada was heading toward Iran. He also said Iran wants a deal, without details.

That kind of headline usually boosts the dollar. This time, it only managed a late rebound.

Warsh Nomination Lifts The Dollar, But January Still Belongs To The Real

Brazil had its own pressures on Friday. Commodity prices were softer. Local data were mixed. The unemployment rate hit 5.1% in the fourth quarter, the lowest in the IBGE series.

The annual average fell to 5.6% in 2025. Economists described the labour market as tight and unlikely to loosen quickly.

That can support the currency through growth confidence. It can also keep inflation-sensitive investors cautious.

Fiscal figures were also in focus. Brazil’s central bank reported gross debt ending 2025 at 78.7% of GDP. That was below November’s 79.0%, but above end-2024.

The charts capture a market that bounced, not reversed. Early Saturday pricing showed USD/BRL around R$5.257, above Friday’s close but still near the recent lows.

On the 4-hour chart, momentum turned sharply higher. RSI climbed into the mid-50s and MACD flipped positive. That suggests short covering and fresh buying interest.

The daily and weekly frames still look heavy. Both remain below key moving averages, with MACD negative on each.

Weekly RSI sits in the high-30s. The message is consistent. The rally is real, but it is still a rally inside a larger downtrend.

Support sits near 5.19–5.21, then 5.17. Resistance starts around 5.29–5.33.

This is part of The Rio Times’ daily coverage of the Brazilian real exchange rate and Latin American financial markets.

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.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error