Recent Brazilian election results have driven sharp USD/BRL volatility, with the real strengthening to near 5.00 per dollar on October 8, 2026, after Flávio Bolsonaro outperformed expectations in the first round. This reflects market-implied odds favoring potential fiscal consolidation under a new administration, narrowing the wide interest-rate differential (Selic near 14% versus Fed funds around 3.75%) that has supported carry trades. Softer U.S. inflation data and resilient foreign inflows have further pressured the pair from its 2025 peak above 5.57, though unanchored Brazilian inflation expectations and fiscal risks keep downside limited. The October 25 runoff and upcoming Copom and FOMC meetings represent key near-term catalysts for the 2026 path.