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.
Source:
https://www.espn.co.uk/football/story/_/id/39228484/real-madrid-sign-defender-january-window-ancelottiThis makes me happy because initially the Indonesian media wrote that Ancelotti would officially coach Brazil after this season ended. But it seems that will not happen because Ancelotti has chosen Real Madrid. Even in the source you listed he refused and chose Real Madrid. Of course this contract extension is a good gift from Real Madrid. I think Ancelotti should be more enthusiastic about building Real Madrid to achieve many achievements. One of today's immediate tasks is dealing with player injury problems. Maybe by transferring new players or taking young players from the Academy.