The last year has been an extremely good one for emerging markets. Sky high equities and low inflation have created a very benign or “Goldilocks” situation for global growth. In recent weeks the lifespan of this situation has been called into question and it appears that the Turkish Lira may be the canary in the coal mine for developing economies.
Analysts at Commerzbank released some technical analysis on Monday which demonstrates an increasingly bullish picture for the US Dollar against the Brazilian Real,
“USD/BRL is trying to overcome resistance at the 3.3188 February high.
"Once bettered, the November and December highs at 3.3347/3.3463 will be in focus.
"Longer term we still have the November 2016 high at 3.5789 in our sights.
"Minor support can be seen between the breached four-month support line at 3.2980, at last week’s low at 3.2645 and also between the 55- and 200-day moving averages at 3.2406/3.2219.
"More significant support can be spotted between the 3.2010/3.1994 November trough and mid-February low.
"Still stronger support remains to be seen at 3.1227/3.1087.
"It is made up of the October and January lows as well as the 2017-18 support line at 3.1164.
"Below it lies the February and September 2017 lows at 3.0804/3.0418.”