Analysts at Credit Suisse think the more forceful FX intervention language and improved external sentiment warrant a range approach to USD/BRL, targeting a 5.20-6.00 range for now, as they have a more mildly bearish BRL view.

See: USD/BRL forecast at 5.50 for Q2 – CIBC

Key quotes

“We still have a fundamentally bearish BRL outlook, but we acknowledge that further BRL strength is possible in the near-term if the sanguine bias in risky assets were to persist, leading to further USD weakness.” 

“The timing of the BCB Governor Campos’ statement on FX intervention, right around the time when USD/BRL seemed close to testing the 6.00 level, will likely be taken by many in markets as a rough signal of the BCB’s intentions with regards to FX.” 

“The 6.25 target we identified two weeks ago might prove too ambitious even as an upper barrier to a possible USD/BRL range: we think that 6.00 would be a more realistic upper barrier for this purpose.”

“On the downside, we think the area around 5.17-5.20, where the USD/BRL rally had stalled in early April, represents a valid near-term lower barrier.”