Societe Generale sees potential for the Brazilian Real to rally toward 5.00 per USD amid softer US data and political tailwinds.
The Brazilian Real has strengthened to 5.07 per USD, retreating from earlier highs near 5.20 in July. A second daily close below the 50-day moving average signals potential for further gains toward 5.00, supported by softer US Producer Price Index data and lower Treasury yields.
Recent polls show President Lula widening his lead to 8 percentage points over challenger Flavio Bolsonaro in a potential runoff, bolstering market sentiment. Stronger retail sales data and improving political stability are also contributing to the BRL’s firm tone.
While US trade tariffs may have limited macroeconomic impact, they could politically weaken Bolsonaro, who is seen as aligned with former US President Trump.