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BRAZIL: Morgan Stanley Sees USDBRL Consolidating Around 6.30 Into 2026 Elections

BRAZIL
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  • According to a Bloomberg article, Morgan Stanley believes the USDBRL short-term floor is at 5.40 and the pair is seen “consolidating” around 6.30 into the 2026 election, according to a strategist.
  • The combination of external and domestic risks, including fiscal noise, made it “harder for BRL to reap the benefits of rising carry”. A break below 5.40 would depend on stronger stimulus in China or a more substantial fiscal announcement, however their base case sees USDBRL closing 2025 at 5.70, and then consolidating at 6.30 into the 2026 election
  • In the short term, the report states that MS prefer to be neutral on the real, but would prefer long positions on the real against the Colombian peso.
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  • According to a Bloomberg article, Morgan Stanley believes the USDBRL short-term floor is at 5.40 and the pair is seen “consolidating” around 6.30 into the 2026 election, according to a strategist.
  • The combination of external and domestic risks, including fiscal noise, made it “harder for BRL to reap the benefits of rising carry”. A break below 5.40 would depend on stronger stimulus in China or a more substantial fiscal announcement, however their base case sees USDBRL closing 2025 at 5.70, and then consolidating at 6.30 into the 2026 election
  • In the short term, the report states that MS prefer to be neutral on the real, but would prefer long positions on the real against the Colombian peso.