Flavio Bolsonaro Appears Set to Become the Next President of Brazil
Brazil will conduct the second round of its elections this coming Sunday on the 25th of October. Flavio Bolsonaro is predicted to win the election handily. No second place presidential candidate has ever comeback after the initial vote and beaten the first place finisher in the 2nd round of the direct elections which was implemented in 1989.
Financial institutions appear to favor a Liberal Party victory over Lula da Silva’s Workers’ Party. If Flavio Bolsonaro wins the vote as expected on Sunday he will have strong coalition powers in the National Congress as a whole, including the upper house Federal Senate with conservative members that is expected to include 45 to 50 approval votes depending on the issue out of 81 collective seats. The USD/BRL closed yesterday’s trading near the 5.0525 vicinity.
USD/BRL One Year Chart as of 23 October 2026
Brazilian Real’s Performance Has Been Solid Since December 2024
The USD/BRL is traversing lower ratios that were challenged momentarily in early August, late July and saw sustained lower action in May of this year with depths touching the 4.9000 area briefly. The Central Bank of Brazil has leadership via Lula da Silva’s choice of Gabriel Galipolo as the Governor who will serve until the 31st of December 2028.
Financial institutions have shown faith in the Brazilian Central Bank as it maintained interest rates and did not succumb to the wishes of many from the Workers Party who had lobbied for a lowering of borrowing costs as inflation ran high. The USD/BRL has performed well since touching highs around 6.2500 in December of 2024. While the USD/BRL has been correlating with the broad Forex market to a degree, reaching the 5.2500 realm on the 1st of October, the Brazilian Real has shown more fortitude than the EUR, GBP and has done better that the South African Rand against the USD the past handful of weeks.
Geo-Political Implications of a Flavio Bolsonaro Victory
Optimism in Brazilian financial institutions regarding a government victory by Flavio Bolsonaro who is seen as pro-business (and certainly is not a socialist) is viewed as a positive by global investors too. The geo-political relationship between Brazil and other nations will be captivating if Bolsonaro wins Sunday’s presidential race. Brazil maintains an enormous trading relationship with China and its membership in BRICS is considered very important. These political relationships should be watched closely.
Brazil’s relationship with South Africa may also be tested quickly as Flavio Bolsonaro imposes a more conservative approach regarding his worldview. Bolsonaro is certainly an ally of President Trump. Brazil’s relationship with the majority of conservative leadership in South America will be dynamic and worth giving attention as it improves. The USD/BRL via behavioral sentiment could find itself testing additional lower values in the coming months. A free enterprise surge from Brazil will create a more vibrant economic landscape in South America, provided corruption is fought and transparency is delivered.
Cautious Global Markets as Optimism Engulfs Brazil
Cautious global investment certainly continues to create problems in equity markets. However, the Ibovespa Index of Brazil has performed exceptionally well the past year, even though it suffered a slight downturn yesterday it remains within sight of all-time highs. The results on the Ibovespa and the USD/BRL considering the predicted election outcome this Sunday will be important for retail traders to monitor.
Speculators need to keep in mind a Liberal Party victory has been factored into the value of both trading assets already, meaning some profit taking could transpire early until additional positive waves of enthusiasm engulf the marketplace…….and then eventually sees euphoria erode back into realistic outlooks and correlations with global mechanisms again.
Paying For Celebrations Via Profit Taking
Traders of the USD/BRL may want to pursue the currency pair in a speculative manner today and early next week, but they need to remain tactical and not allow overly ambitious targets guide their wishful thinking. Bias needs to be eliminated and USD/BRL traders should not indulge in leveraged positions which could get out of hand quickly if sudden sentiment shifts strike via larger players and financial institutions, particularly if they cash out winning positions (this to pay for some victory celebrations should the mood strike). The USD/BRL appears to be in a solid position to continue move lower via positive outlooks for business enterprise in Brazil, but traders should remain realistic and not step out ahead of the parade unless they have deep pockets and can demonstrate patience.
A Gap Higher Amidst Over-Exuberant Retail Trader Ambitions
Early Tuesday’s price action in the USD/BRL did see the 5.0000 realm come into sight, but an upwards wave developed and Thursday’s opening did produce a gap higher which tested values near 5.7500 momentarily. Yes, conditions appear ripe for exuberance to help the Brazilian Real become stronger against the USD, but retail traders need to practice risk management at all times.