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Election risk weighs on Brazilian real, TD warns USD/BRL may rise

TD Securities keeps a 5.30 USD/BRL forecast for H2 2026 and says USD/BRL could offer better levels to initiate shorts later, given concerns over Brazil’s fiscal outlook.

Reported · Written up by our desk · Major Pairs

TD Securities said election-related risks are keeping pressure on the Brazilian real, with USD/BRL testing its 200-day SMA resistance over the past month, according to FXStreet. The bank drew a comparison to 2014.

The firm said market anxiety about Brazil’s fiscal outlook skews risks toward a higher USD/BRL, noting that in 2026 Lula remains on track in most polls and his opposition to fiscal consolidation could weigh on the currency.

TD Securities maintained its 5.30 USD/BRL forecast for H2 2026 and said it is not advocating BRL carry positions or USD/BRL shorts near-term, instead preferring to wait for better entry levels.

FXStreet also noted other dollar dynamics in the same market wrap, including AUD/USD trading near its highest level since May 14 and USD/JPY recovering above 154 after earlier weakness.

Latest closeUSD/JPY 157.84 ▼0.3%

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