Elon Musk‘s legal battle against the Brazilian Supreme Court judge, Alexandre de Moraes, gained a new chapter this week. As de Moraes threatened to block X in Brazil and locked Starlink funds, Musk warned of systemic risk for foreign investments in the country, impacting the USD/BRL pair.
According to the Brazilian newspaper Estadão, Elon Musk reacted to Alexandre de Moraes’s retaliation, saying Brazil is in a dictatorship. The multi-billionaire businessman believes the country “is not safe for foreign investments,” as Estadão reported on August 29.
Elon Musk vs. Alexandre de Moraes: What is happening in Brazil?
Essentially, the reported warning comes amid massive legal pressure against Musk enterprises in Brazil, starting with a dispute regarding X.
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As things developed, X Corp’s Brazilian representative was threatened with imprisonment and had her bank accounts locked for not complying with what the company deems an illegal demand of censoring de Moraes’s political enemies on the social platform formerly known as Twitter.
The branch decided to close its operations in the country as regulatory risks increased. Then, Alexandre de Moraes targeted Starlink – a subsidiary of SpaceX, unrelated to X Corp. Interestingly, Elon Musk owns only 42% of SpaceX, causing this personal retaliation to affect other shareholders.
USD/BRL price analysis
Following these events, the U.S. dollar surged against the Brazilian real, currently trading at R$5.64 per USD. This marks a nearly 3% gain for the week since Monday’s opening on August 26.
Notably, the dollar crossed the 30-day exponential moving average at R$5.54, making what could be a local top. This is because a ‘head and shoulder’ pattern appears in the USD/BRL daily chart.
If this chart pattern plays out, the BRL could soon regain strength against the USD despite the reported uncertainties. From a purely technical analysis perspective, the dollar could plummet in the following days. Particularly targeting the 365-day exponential moving average as support in a range between R$5.15 and R$5.20. Right now, the 365-EMA has support at R$5.17.
In closing, forex traders and foreign investors should closely watch both the USD/BRL price chart and ongoing developments in Brazil to make informed decisions.
X continues to work flawlessly in Brazil while Elon Musk continues dropping public provocations against Alexandre de Moraes. Starlink funds are still blocked, and the company temporarily provides its services for free in the country.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
