When interest rates in Brazil are rising relative to those in the United States, it often leads to an increase in foreign investment in Brazil, as investors seek higher returns from Brazilian assets. This increased demand for Brazilian real to invest in the country can lead to an appreciation of the Brazilian real.
At the same time, as investment flows into Brazil, there may be a decrease in demand for the U.S. dollar, which could lead to a depreciation of the U.S. dollar.
Therefore, the correct response is:
The U.S. dollar is depreciating while the Brazilian real is appreciating.