Recent Brazilian election results have driven sharp USD/BRL appreciation, with the pair trading near 4.99 as of mid-October 2026 after falling from above 5.20 earlier in the month. Flávio Bolsonaro’s strong first-round performance has raised expectations for fiscal consolidation and deregulation, prompting analysts at JPMorgan, Goldman Sachs, and ING to revise forecasts lower toward 4.70–4.80 assuming a runoff victory on October 25. Brazil’s Selic rate at 13.75% maintains an attractive carry differential, though September inflation at 4.58% y/y above the 3% target limits aggressive easing. Key near-term catalysts include the runoff outcome, November Copom decisions, and U.S. monetary policy signals that could alter risk sentiment and terms of trade.