Societe Generale has issued separate technical notes signaling continued bearish momentum for the U.S. dollar against two key emerging-market currencies: the Brazilian real and the Chinese offshore yuan. The analyses point to a confluence of monetary policy divergence, improving commodity terms of trade, and shifting global capital flows as factors driving the greenback lower in these pairs.
USD/BRL: Real resilience and the 5.00 threshold
The French bank’s forex strategists view the USD/BRL pair as trapped in a descending channel since mid‑2024, with sellers remaining in control. The pair is currently testing the psychological 5.00 support level, and a break below could accelerate losses toward the 4.85 region. The Brazilian central bank’s aggressive tightening—the Selic rate sits at 14.25%—has fueled carry-trade inflows, contrasting with the Federal Reserve’s more gradual approach. Societe Generale advises that selling rallies while the pair stays below 5.20 remains the preferred strategy, with only a move above that zone calling the downtrend into question.
USD/CNH: Bearish momentum targets 6.77–6.69
For the offshore yuan, the downtrend extended after the pair failed to hold above 7.00 and subsequently broke below 6.90. The next key support zone—6.77 to 6.69—represents a confluence of prior price levels and Fibonacci retracements. A sustained move below 6.69 could open the door to a test of 6.60. The yuan’s strength is underpinned by expectations of Fed rate cuts, stabilization in China’s manufacturing sector, and stronger‑than‑expected export figures. Traders with exposure to the pair are warned to monitor possible intervention from the People’s Bank of China, which has historically stepped in to curb volatility.
While Societe Generale’s base case remains bearish on the dollar in both pairs, risks such as a shift in global risk sentiment, a more hawkish Fed, or fiscal slippage in Brazil could trigger sharp reversals. For cryptocurrency investors, a broadly weaker dollar often acts as a supportive backdrop for risk assets, although these specific currency moves are not directly crypto‑centric.
