USD/BRL could continue to gyrate following Wednesday’s FOMC meeting, in which Federal Reserve Chair Jerome Powell indicated that a taper of asset purchases is “imminent.” With the Fed moving toward tightening and the BCB well and truly there, USD/BRL may be subject to additional volatility in the coming weeks. Dollar strength in September has seen USD/BRL push back toward 5.30, but continued hawkish policy from the Central Bank of Brazil could see the cross retest the 50-day moving average or trendline support below.
