By: Leonel Mattos, Market Intelligence Analyst • BRAZIL PRS
USDBRL and Dollar Index (points)
USDBRL Variations | Daily: +0.52% | Weekly: -0.84% | Monthly: +1.43% | Annual: -8.25% | In 12 months: -11.23%
Dollar Index Variations | Daily: +0.11% | Weekly: -0.01% | Monthly: +1.26% | Annual: +0.99% | In 12 months: -0.66
US: History and expectation for interest rates – updated on May 22, 2026
The foreign exchange market is expected to react to the release of US economic data amid growing concern about inflationary pressures in the country.
Why this matters: More persistent and widespread inflation in the US results in expectations of higher interest rates for longer, favoring the yield on US Treasury bonds and contributing to the attraction of external resources, strengthening the dollar globally.
Estimates for PCE: The median estimates for the Personal Consumption Expenditures (PCE) Price Index point to an increase of 0.3%, compared to 0.5% in March, and to a new growth of 0.3% in its core measure, which excludes the most volatile food and energy components.
Inflationary risks: Previously, the core Consumer Price Index (CPI) accelerated by 0.4% in April, above the median estimate of 0.3%, while the core Producer Price Index (PPI) accelerated by 1.0% in the same month, well above the median estimate of 0.3%.
No room for interest rate cuts: Amid this inflationary challenge, investors have reversed their bets on the Federal Reserve's next interest rate move, shifting from anticipating a cut to predicting a hike.
In the words of the minutes: “Almost all participants [of the FOMC] observed that (...), even after the end of the conflict [in the Middle East], oil and other commodity prices could remain elevated for longer than anticipated.”
Economic activity: Investors are also expected to react to the release of indicators on US economic activity, which should continue to expand and suggest that there is no need for Fed interest rate cuts in the short term.
Ship movements in the Strait of Hormuz (seven-day moving average)
The back-and-forth over a possible preliminary agreement between the US and Iran is expected to remain on investors’ radar. The current climate of uncertainty, with conflicting information about possible advancements or setbacks, generated volatility and fluctuations last week.
Why this matters: The lack of clear signals about the progress of negotiations and possible normalization of flows in the Strait of Hormuz tends to increase risk perceptions among investors and harm the performance of risky assets, such as the real.
Statements from Washington: The latest statement is from the US Secretary of State, Marco Rubio, who said he sees progress in the negotiations but that “we’re not there yet.”
Statements from Tehran: On Iran’s side, news reported that Iran’s supreme leader, Mojtaba Khamenei, had determined that enriched uranium must remain in the country, contradicting a sensitive demand from the Americans.
Possible agreement between the countries? The latest information about a possible truce between Washington and Tehran involves a preliminary agreement for the complete opening of the Strait of Hormuz while the countries discuss other topics.
Investors are expected to react to the release of economic data for Brazil, seeking to calibrate expectations for the trajectory of the benchmark interest rate (Selic).
Why this matters: The prospect of more persistent and widespread inflation in Brazil tends to reduce investors’ bets on interest rate cuts by the Central Bank.
Estimates for GDP and inflation: The Brazilian economy is expected to continue showing a modest growth trajectory. After a 0.1% growth in the fourth quarter, the median estimates for Brazil’s Gross Domestic Product point to a 0.2% increase in the first quarter of 2026.
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