Currencies: volatility follows China–US trade deal

Currencies react to the China–US agreement

The EUR/USD pair depreciated by -0.77% to 1.1163. The announcement of a trade agreement between China and the United States during the weekend revived hopes of a de-escalation in trade tensions, which significantly strengthened the US dollar this week. The two countries jointly decided to suspend new tariffs measures for 90 days. These tariffs have been reduced to 30% on US imports from China instead of 145%, and to 10% on Chinese imports from the United States instead of 125%.

In April, US inflation stood at 2.3%, after 2.4% in March. This decrease would further reinforce the scenario of the Fed monetary policy easing in September 2025.

Currency trends: the dirham adjusts cautiously

The USD/MAD pair appreciated by +0.40%, from 9.25 to 9.29 this week. This evolution was primarily due to a positive basket
effect of +0.32%, related to the Dollar's strong appreciation this week following the trade agreement between China and the United States. On the other hand, the market effect was slightly positive at +0.08%.

The Dirham's liquidity spreads thus tightened slightly, by +8 BPS, still at over three-year lows, at -4.60%, thanks to lower import flows related to the decrease of energy prices. These levels are approaching the lower band of the Dirham's fluctuation band, at -5.0%.

Short-term hedging recommended

Despite the lull between China and the United States, uncertainties related to trade tensions, particularly between the United States and its major trading partners, persist, fueling concerns about global economic growth and international currency volatility. As such, significant currency volatility is expected. We recommend traders to hedge their trades over time horizons from 1 month to 3 months.