Real Madrid gave Ancelotti a new contract until 2026. This means that Real Madrid still really needs Ancelotti's manpower. This means that the speculation regarding Ancelotti and Brazil is over. But I can't know if this is Madrid's move to keep getting money if they leave. Ancelotti has thanked the president of Brazilian football for being interested in using his services. It seems that Ancelotti in these words slightly indicates that he will honor the contract from Real Madrid.
Madrid announced Ancelotti's new deal through June 2026 on Friday, after repeated speculation linking him with the Brazil national team.
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https://www.espn.co.uk/football/story/_/id/39228484/real-madrid-sign-defender-january-window-ancelottiAncelotti has always maintained that he would have the pleasure of continuing to work for Real Madrid, so I believe that he will still honor the contract that was offered to him, and I am sure that the next step for Ancelotti will be to coach the Italian national team or another national team and try to win the World Cup as a coach