Mastering USD/BRL Trading: Strategies and Tips 

The USD/BRL currency pair may be of interest to forex traders wishing to trade the interplay between an advanced economy and a developing one. It features the US Dollar (USD) and the Brazilian Real (BRL), providing access to both the largest economy in the world, and the biggest economy in Latin America. 

This article will discuss the basics of trading this currency exotic pair, the potential and pitfalls in doing so, and the importance of risk management. 

What is USD/BRL trading?

USD/BRL trading refers to trading the exchange rate changes between the US Dollar (USD) and the Brazilian Real (BRL). This is performed on the foreign exchange (forex) market.  

The currency pair USD/BRL compares the value of the base currency (in this case, the USD) against the quoted currency (BRL). It shows how much BRL is needed to purchase one unit of USD.  

As of Dec 2024, the USD/BRL pair is trading at 6.25 – this means that 1 US Dollar would cost you 6.25 reals ^[1].   

When trading the currency pair USD/BRL, traders do not have to hold either currency. Instead, they can simply buy or sell the USD/BRL pair, depending on their view of the market.  

How does trading USD/BRL work?

Currency pairs work by buying one currency while simultaneously selling the other.  

For USD/BRL, buying the pair means buying more USD by selling BRL. Conversely, when selling USD/BRL, you’re selling USD to buy more BRL.  

Recall that when USD/BRL is quoted at 6.25, this means that 1 USD = 6.25 BRL.  

If the value of the USD rises against the BRL, it would cost more BRL to purchase 1 USD. If it falls, it would cost less BRL to purchase 1 USD. Hence, the quote for the USD/BRL pair rises and falls as both currencies move relative to each other.  

• When USD/BRL goes from 6.25 to 6.9, the currency pair has risen 

• When USD/BRL goes from 6.25 to 5.9, the currency pair has fallen 

Forex traders thus attempt to capture profit by buying or selling the USD/BRL currency pair according to their view of whether it will rise or fall. If the currency pair moves as expected, the trade succeeds; if not, the trade fails.  

USD/BRL history ^[2] 

1994 to 1999 

The current real in circulation is the latest in a long line of currencies. It was introduced in 1994 in replacement of the cruzeiro real, as part of government measures to stabilise the Brazilian economy, known as Plano Real. 

While the real was calculated to be pegged to the USD 1:1, shortly after its introduction, strong economic inflows in late 2024 and 2025 saw the real appreciating sharply, reaching an exchange rate of 1 real to USD 1.20. This rapid rise prompted the Brazilian central bank to introduce measures to bring the currency under control, which saw a slow and gradual depreciation of the real to the dollar, dropping to around USD 1 to 1.2 real by end 1998.  

However, in January 1999, the Russian debt default led to severe financial shocks around the world. In response, the Brazilian central bank switched the real from a fixed-rate currency to a partially floating regime. This change caused a major devaluation in the real, causing the exchange rate to drop to USD 1 = 2 real. 

1999 to early 2000s 

This period saw the real charting a downward trend, sparked by political instability and regulatory changes.  

From 1999 to late 2002, the potential election into office of leftist candidate Luiz Inácio Lula da Silva gave rise to a currency crisis and a spike in inflation. Fears of government default and return to unpopular economic policies caused the real to come under immense selling pressure, as many sought to flee into tangible assets or foreign currencies.  

This decline abated when Lula took office and, together with his finance ministers, reaffirmed their intention to continue with the macroeconomic policies laid down by his predecessor, as well as continued commitment to repay public debt.  

By May 2007, for the first time in six years, the USD/BRL rose over USD 1 = 2 real, rising to USD 1 = 1.66 real by 2010. 

2019 to 2023 

After a period of recovery, the Brazilian real once again entered a period of decline. This was first sparked off by COVID-19 lockdowns, which severely affected Brazil’s export-driven economy. The real vs USD exchange rate reached a historical low of USD 1 = 5.90 real. 

In 2022, the re-election of Lula initially brought hope to the market, with the real strengthening against the Dollar to a rate of USD 1 = 5.05 real a week after Lula’s victory. However, by November 2024, the real had fallen against the Dollar, reaching USD 1 = 6.15 real.  

Why trade USD/BRL?

The USD/BRL pair presents a viable, if volatile, option for forex traders to capitalise on the dynamics between the US and Brazilian economy. Here’s a brief summary why this currency pair may be worth your attention.  

Economic factors  

Despite fluctuating GDP growth, Brazil nonetheless holds solid potential. It is the largest economy in Latin America, and 8th largest in the world, being a major exporter of several important commodities including coffee, soybeans, sugarcane, iron and crude petroleum. Additionally, it also has strong finance, real estate and services, automobile manufacturing, renewable energy and construction industries ^[3]. 

Meanwhile, the US remains the largest economy in the world. Remarkably, it emerged from the COVID-19 pandemic on strong terms, despite record-high inflation which forced interest rate hikes. The Dollar’s continued strength is a boon to traders, as it offers a stable anchor in the USD/BRL pair.  

Meanwhile, the 2022 return of Lula to office has wrought positive impact on the Brazilian economy. The country’s GDP is expected to grow by 3% in 2024, far outstripping the 0.6% projected by economists; inflation is holding steady at around 4.7%; and unemployment in November fell slightly to 7.5% ^[4]. 

Volatility  ^[5,6] 

While the Brazilian economy seems set on the right track under Lula’s renewed leadership, risks still abound. Public sector debt is high, at close to 80% GDP; and there is significantly increased tax burden on the economy, both historically and when compared to emerging-markets average. Furthermore, public investment is low. 

Meanwhile, over in the US, record-high valuations in equities are promoting calls that a bubble is forming in the stock market. While analysts say the S&P 500 still has around 30% headroom in 2025, things may take a turn for worse thereafter. A stock market crash could see the US Dollar fall as investors rush to get rid of American equities and move into safer assets. This could spark off volatility in the USD/BRL pair that may well offer rewarding opportunities for those prepared.  

What moves the USD/BRL exchange rate?

Economic factors

GDP of Brazil 

Continued growth in Brazil’s GDP could see a return of global investor attention, attracted by the potential to capitalise on the Latin American economic powerhouse as it returns to form. This would increase overall demand for the real, providing impetus for the currency to rise against the Dollar. 

Inflation 

Inflation remains a concern in both the US and Brazilian economy. High inflation increases the chance of interest rate hikes, which generally drives up demand for currencies among investors seeking risk-free returns.  

As such, traders should watch interest-rate decisions closely in both the US and Brazil, so as to prepare for potential opportunities.  

Trade balance 

Trump’s return to the White House has raised the spectre of increased tariffs on global trading partners, Brazil included. Increased trade tariffs could reduce the amount of Brazilian exports to the US, which is detrimental to Brazil’s export-reliant economy. Furthermore, that the US is Brazil’s second-largest export market gives the prospect further significance ^[7]. 

Reduced exports due to higher tariffs can drag down Brazil’s economic growth, which could manifest in a weakening of the real against the Dollar. At the same time, higher tariffs on imports would also keep prices high in America – this could lead to inflationary pressures that may lead to a devaluation of the Dollar (in the absence of interest rate hikes).  

Global factors 

Strength of the US Dollar ^[8,9] 

Given its status as the world’s reserve currency, a strong US Dollar generally causes weakness in the currencies of emerging economies. This is due to two factors: one, a return of investment capital to the Dollar, and two, more debt becomes more expensive for overseas borrowers. 

Furthermore, to stem capital outflows, emerging economies are pressured to raise interest rates, but do so at the risk of slowing down their own economies. This contributes further downward pressure on their home currencies. 

During the COVID-19 pandemic, the US – among other countries – were afflicted by high inflation. This led to many central banks raising interest rates around the world. As an emerging economy, Brazil was impacted by this move, with the real falling against the Dollar as a result. With the US Fed cautious approach to lowering interest rates, this has created continued pressure on emerging economies in 2024. 

Furthermore, with a crisis of confidence brewing in Brazil over concerns regarding the conduct of fiscal and monetary policies – centred around the relaxing of budget targets for 2025 and 2026, leading to increased fears of inflation – the real in 2024 has depreciated more sharply compared to its peers. 

The combination of continued strength in the US Dollar and waning investor confidence in Brazil was the main reason for the rally seen in the USD/BRL currency pair this year. 

Commodity prices 

Being a key exporter of commodities, Brazil’s trade balance is sensitive to worldwide commodity prices. When commodities prices are high across the globe, this can increase the earnings of Brazilian exporters, leading to a positive trade balance and a strong real.  

Conversely, low commodity prices may lower exporters’ earnings, leading to weakness in Brazil’s economy. This is so because exports made up 70% of Brazil’s GDP in March 2024 alone.  

With a weakening economic outlook, the Brazilian central bank may decide to cut interest rates to stimulate the economy; this in turn weakens the real, providing fuel for the USD/BRL to rise. 

Geopolitical events 

Global exports are sensitive to geopolitical events, being impacted by recessions, trade policy changes, natural weather conditions, wars, consumer trends and more. These factors may impact levels of production or market demand, affecting prices and revenue of exporters.  

Brazil’s role as a key exporter of many important commodities such as coffee can give it an advantage when geopolitical factors cause reduced production levels in competing regions (such as Vietnam) ^[10]. This can lead to a stronger real, creating downward pressure on the USD/BRL currency pair.  

How to trade USD/BRL currency pairs?

1. Open a Live Account 

Open a live account with a trusted and regulated online brokerage that offers USD/BRL trading. Vantage is an award-winning broker that offers CFD trading for USD/BRL.  

2. Deposit Funds 

Once your account is ready, deposit funds to start trading. Be sure not to exceed your trading budget. You can start trading USD/BRL from as little as $50 with Vantage.  

3. Start Trading USD/COP 

Download and install your preferred trading platform to access live market data and enter your trades. You can choose from desktop, mobile or web-based trading platforms with Vantage. 

4. Monitor Your Trading 

Due to the volatility of the USD/BRL pair, it is advisable to keep a close eye on your trade. Monitor your position while also keeping track of market news, events and economic indicators that could impact your trade, so you can be better prepared to make changes as necessary.  

Practise trading USD/BRL 

Not ready to trade the USD/BRL currency pair on the live markets? Don’t worry, you can practise your strategies and test trading ideas without risking real cash.  

Sign up for a demo account to familiarise yourself with how trading works, and build your confidence without the pressure of live trading. 

USD/BRL trading strategies 

Scalping 

In scalping, forex traders carry out a series of trades in quick succession, buying and selling the USD/BRL several times throughout the trading day. The aim is to generate profit over multiple small trades, instead of fewer but larger trades. Scalp trades are typically short-lived, with most lasting only minutes.  

This strategy can work well with the USD/BRL pair due the pair’s inherent volatility. However, there is the potential of sudden trend reversals, necessitating proper use of risk management techniques.  

Swing trading 

Another trading strategy to consider with the USD/BRL pair is swing trading. This trading strategy focuses on capturing gains from price swings, which is when the USD/BRL moves from a well-established support level to a predetermined resistance level, and vice versa.  

Swing trades take place over a short time frame, and a forex swing trader may make multiple trades within a period of days or weeks. Swing trading works best when the USD/BRL is moving in a range-bound pattern. It is useful for traders who may not have time to watch the market minute by minute, but still want to capitalise on the momentum of the USD/BRL pair.  

Range trading 

Range trading appears similar to swing trading, but takes place over a longer time frame. Also a range trader tends to continue with the trade as long as the price remains within a predefined range.  

Like swing trading, range trading attempts to capture profit from price action. To do so, a forex trader must correctly identify the start of a price trend – whether up or down – and take an appropriate position. Range traders ignore short-term reversals in favour of long-term trends; as such it is important to be able to screen out market noise and have the conviction to see your trade through.  

Breakout trade 

A breakout is defined as an event where the price of the USD/BRL pair significantly breaks above or below a previously established range. Accordingly, a breakout trade works on the principle that once a breakout has occurred, the price has a tendency to continue in the same direction.  

For instance, if the USD/BRL had been trading around 6.500 and suddenly broke out strongly, a trader might put in a buy in the expectation that the price will continue rising. The risk here is that the price might suddenly reverse, wiping out gains or even causing losses; hence proper use of stop-losses is crucial when utilising this strategy.  

Analysing the USD/BRL pair 

Fundamental analysis 

When performing fundamental analysis on the USD/BRL pair, it’s important to pay attention to macroeconomic and geopolitical news and developments that could impact either or both the American and Brazilian economies. 

Here are some of the important factors worth focusing on. 

US interest rate 

As discussed earlier, the strength of the US Dollar negatively impacts emerging markets, and the real is no exception. With the Fed slowing down on interest rate cuts due to stubborn inflation, the real could face prolonged downward pressure, keeping the USD/BRL on an upwards trajectory.  

Conversely, if the US Fed turns dovish and ramps up interest rate cuts, the market could see a rebound of the real against the Dollar. This would manifest in a fall in the USD/BRL pair.  

It’s crucial to watch for further interest rate announcements from the US Fed and factor them in when planning your trades. 

US trade policy  

With the US being an important trading partner of Brazil, Trump’s attempts to implement trade tariffs should be watched closely. Placing import tariffs on Brazilian goods will negatively impact exporters revenue, with the potential to place a dent in the Latin American country’s GDP. This could push the real into a further nosedive against the Dollar, which means another rally in the currency pair might be on the horizon.  

Political changes in Brazil 

Despite a much lauded return to office in 2022, Brazilian president Lula’s administration is facing a crisis of confidence in 2024, as discussed earlier. Thus, traders should keep up with political news and announcements in Brazil. Should simmering disaffection boil over, investors could pull their capital out in favour of more stable regimes.  

If this happens, the real could undergo significant devaluation – an occurrence which could benefit well-prepared traders. 

Technical analysis  

Given the highly complex and intertwined nature of global trade and macroeconomics, it’s not surprising that some traders prefer to focus on technical analysis instead. The practice ignores all other news, and focuses solely on price action, due to the core belief that all market news is already priced in.  

In any case, technical analysis can be useful to help traders screen out market noise by measuring and checking against price action. Some popular technical indicators include: 

• Candlestick patterns. By studying patterns formed by consecutive bars on a price chart, traders can spot bullish and bearish signals. In turn, these can be used to confirm or deny upcoming price trends or events, helping traders more accurately find appropriate entry and exit points for their trades.  

• Support and resistance. Within a specific time range, support indicates the lowest point the USD/BRL goes to but no further, while resistance marks the highest point the pair has gone, but not beyond. When the USD/BRL pair trades between support and resistance for a period of time, this is described as being “range-bound”.  

By charting lines of support and resistance, traders can more accurately find trading ranges, which is useful when executing trading strategies such as range trading.  

• Fibonacci retracements. This is a technical indicator that plots lines of support/resistance based on numbers found in the Fibonnaci sequence. When plotted on a price chart, it helps traders predict price action by marking out points where the price might potentially retrace to. This is based on the observation of naturally occurring patterns, patterns which some traders believe appear in the markets too.  

While it may sound simple, Fibonacci retracements can be confusing especially for newcomers who may not know which retracement level to follow. As with all technical indicators, Fibonacci retracements are best paired with other indicators and chart patterns as a means to counter check your interpretations. 

• Relative Strength Index (RSI) is a highly popular technical indicator that can help traders gauge market sentiment and understand the current price action. It is an oscillator that fluctuates on a scale going from 0 to 100. Readings that are 30 or below indicate that the USD/BRL is oversold, strengthening the potential for the price to go up. Conversely, readings of 70 and above indicate that the currency pair is overbought; this enhances the possibility that the pair will soon fall. 

Risk management when trading USD/BRL ^[11] 

The USD/BRL pair can be highly volatile, due to the pairing of a stable currency with one belonging to an emerging economy. Even though the currency pair has historically charted an upwards path, traders should respect the potential for short-term volatility and even trend reversals. 

Notably, between May 2020 and Dec 2023, the USD/BRL pair traded mainly range-bound, spiking and diving between 5.8 and 4.6. It wasn’t until 2024 did the pair resume charting an upwards path. 

As such, proper risk management should be applied whether for short-term or long-term trades. Consider including these risk management tools and techniques when trading the USD/BRL pair.  

• Set appropriate stop-loss and take-profit points. This will help you avoid staying in a trade past your welcome, eroding your gains or even turning a winning trade into a losing one. 

• Control use of leverage. Leverage is commonly used in forex trading to amplify the value of a trade, allowing traders to reap large profits from small movements in a currency pair. Just like how it can amplify your gains, leverage can also amplify your losses, which means you could lose a larger portion of your trading capital than anticipated. Hence, leverage is risky, and its use must be kept to a suitable level so as to avoid your trading account dropping to zero, or worse – going into the negative.  

• Choose a suitable trading strategy and stick with it. As discussed, there are several trading strategies that can be applied to the USD/BRL pair, ranging from short-term to long-term. You should choose ones that suit your preferences, including your tolerance for volatility and time horizon. Once you’ve set up your trade, stick with the plan and see it through. Changing your strategies halfway, or trying to chase fleeting or meaningless trends, will only increase the chances of mistakes or cause you to take on unnecessary risk. 

Best time to trade USD/BRL ^[12] 

In general, the best time to trade the USD/BRL currency pair is when both the US and Brazilian stock market hours overlap. This takes place between 2pm to 9pm GMT, Mondays to Fridays, and the confluence of activity in both markets create high liquidity conditions for traders.  

In particular, the overlap between the New York and London stock market trading hours (12pm to 4pm GMT) is of crucial importance, due to the potential impact to the Dollar that could arise. 

Additionally, it’s worthwhile for traders to pay attention from 1pm GMT onwards, which precedes the opening of the New York Stock Exchange. This is when important news and announcements could be released, driving substantial price changes. 

Final thoughts

The USD/BRL pair is a dynamic forex currency instrument that pairs the dominance of the US Dollar with the vibrant potential of the Brazilian real.  

The close trade relationship between both economies, and the disparity between their economic statuses, can create intriguing trading opportunities for those prepared to accept high volatility in the short term.  

When zoomed out, the USD/BRL pair has been seen to chart an upwards trajectory, which bodes well for those interested in expressing a long-term view of this exotic currency pair.  

On the flipside, traders focused on short-term strategies can also find convincing opportunities in the near-term trend, going by the pair’s range-bound behaviors in the last five years.  

The USD/BRL offers exciting potential for forex traders, but its complexities and inherent volatility can be daunting for beginners. This pair is best left to advanced traders who are savvy at making sense of complex macroeconomic relationships and correlations.  

Trade USD/BRL with tight spreads and low fees with Vantage

Capitalise on the potential of USD/BRL’s dynamic price action with Vantage. Trade USD/BRL CFDs with tight spreads and low fees on our award-winning trading platforms. Experience lightning-fast order fulfilment to keep up with market changes, explore advanced trading tools and features at your fingertips, and hone your knowledge with our rich collection of educational resources spanning webinars, ebooks and guides.  

Sign up for a live account today! 

FAQs for USD/BRL trading

What are the costs involved for trading USD/BRL at Vantage? 

Trading forex CFDs incur spreads, which is the difference between the bid price and ask price. Vantage does not charge commissions, but other fees such as holding charges, swap fees, conversion fees and interest on leverage may be applied.  

What is the spread on USD/BRL at Vantage? 

The spread for trading USD/BRL at Vantage varies according to which account you have: 

For RAW ECN Accounts, spreads start from as low as 0.0 pips. Meanwhile, standard STP Accounts charge spreads starting from 1.0 pips.  

What platforms can I use to trade USD/BRL?  

Vantage offers traders several choices of trading platforms, catered to different needs and preferences.  

Advanced traders who offer a full-fledged experience can choose MetaTrader 4 (MT 4), which is widely regarded as the best trading platform for forex. You can download and install MT 4 to your desktop or laptop to trade at your comfort.  

Meanwhile, those who prefer to trade from anywhere and at any time can choose the Vantage mobile app. It is packed full of features and tools designed to facilitate trading while on the go.  

There’s also the Vantage Web Trader, our custom-built browser-based trading platform, allowing you to trade from any location. This is the ideal option for those who prefer desktop trading without having to lug around their own computers.  

Is USD/BRL a good pair to trade? 

USD/BRL offers traders an intriguing instrument to diversify into the Latin American sector while supported by the stability of the United States’ dominant economic position. The pairing of the Dollar and the real creates potential for long-term plays, given the enduring disparity between both economies – one advanced, one emerging. At the same time, trade balance and geopolitical factors create opportunities for near-term volatility that could prove rewarding for well-prepared forex traders.      

How can I stay updated on USD/BRL news and analysis?  

On Vantage Academy, we publish guides, courses and webinars on forex trading, providing news and insights on exotic pairs such as USD/BRL. You can also make use of our Economic Calendar to stay updated on geopolitical news and macroeconomic events that could impact the USD/BRL pair.  

Using our feature-rich trading platforms, you can save USD/BRL into your watchlist to track market changes in real time with live feeds. Use our range of charting tools and technical indicators to alert you when trading signals are present.  

For updates while on-the-go, download our Vantage mobile app to get the latest development and insights on USD/BRL at your fingertips.  

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