International highlights
Dollar strengthens amid rising Geopolitical tensions
The EUR/USD pair declined by -0.37% to 1.1722 by the end of the week, weighed down by a renewed wave of risk aversion stemming from escalating tensions in the Middle East, thereby supporting the US Dollar. On the macroeconomic front, the ZEW economic sentiment index for the Eurozone deteriorated sharply to -20.4 in April, falling short of expectations at -12.7. Conversely, in the United States, March retail sales posted a solid increase of +1.7%, compared to 0.7% previously. Against this backdrop, markets are pricing in a monetary policy pause from both the Fed and the ECB, ahead of their upcoming policy meetings next week.
MAD evolution and foreign exchange market liquidity indicators
Dollar strengthens amid rising Geopolitical tensions
The EUR/USD pair declined by -0.37% to 1.1722 by the end of the week, weighed down by a renewed wave of risk aversion stemming from escalating tensions in the Middle East, thereby supporting the US Dollar. On the macroeconomic front, the ZEW economic sentiment index for the Eurozone deteriorated sharply to -20.4 in April, falling short of expectations at -12.7. Conversely, in the United States, March retail sales posted a solid increase of +1.7%, compared to 0.7% previously. Against this backdrop, markets are pricing in a monetary policy pause from both the Fed and the ECB, ahead of their upcoming policy meetings next week.
Volatility indicators
US Dollar Regains Appeal Amid Heightened Market Volatility
The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, reached a new high during the week, exceeding 98 for the first time since April 2026. Meanwhile, Brent crude prices rose to $106/bbl, reigniting inflation expectations amid elevated volatility across financial markets. In this volatile environment, we recommend that market participants implement short-term hedging strategies to mitigate risk exposure.
EUR/USD outlook– BLOOMBERG
Broker forecasts for the EUR/USD pair have been revised upward on the medium- to long-term horizons this week. The pair is expected to remain at 1.17 in Q2-26 before rising to 1.18 in Q3-26. For Q4-26, the target has been lifted to 1.19 from 1.18 previously, a level around which the pair is expected to stabilize through Q1-27. In 2027, the target is now set at 1.20 versus 1.19 previously. Over the longer term, projections remain broadly unchanged at 1.19 for 2028, while the 2029 target has been revised down to 1.19 from 1.21.
Recent US macroeconomic releases point to a broadly resilient environment. The University of Michigan consumer sentiment index came in at 49.8 in April, above the consensus estimate of 47.6. In addition, five-year inflation expectations rose to 3.5%, marking their highest level since October 2025. Against this backdrop, investors are pricing in a pause in Fed monetary policy at the upcoming FOMC meeting, according to the CME FedWatch Tool.
In the Eurozone, indicators suggest a weakening in economic activity. The April services PMI came in at 47.4, below expectations of 49.8, signaling a contraction in the sector. Meanwhile, the IFO Business Climate Index declined to 84.4 in April, its lowest level since October 2022. These developments reflect a slowdown in economic momentum amid heightened sensitivity to energy-related risks. In this context, markets are also anticipating a pause in ECB monetary policy at its next meeting, according to the ECB Watch Tool.
Maintaining our forecasts over the 1- 2- and 3-month horizons
Considering the EUR/USD parity forecasts and the liquidity conditions in the foreign exchange market, we have revised downward our USD/MAD projections across the 1-, 2- and 3-month horizons. Broker expectations for EUR/USD point to a slight appreciation of the US Dollar against the Euro over the 3-month horizon, relative to current spot levels. Meanwhile, Dirham liquidity spreads are expected to gradually tighten over the 1- and 2-month horizons compared to current levels, before easing at the 3-month horizon.
Under these conditions, our target levels for USD/MAD stand at 9.32, 9.32, and 9.29 over the 1-,2-,and 3-month horizons, respectively, compared to a current spot level of 9.26. Similarly, EUR/MAD targets are projected at 10.89, 10.89, and 10.86 over the 1-, 2-, and 3-month horizons, respectively, compared to a current spot level of 10.83.
