International highlights
Fed raises rates and strengthens the Dollar
The EUR/USD pair fell by -0.97% over the week, reaching 1.1486. The +25 bps hike in the Fed funds rate, combined with a tense geopolitical environment in the Middle East, supported the Dollar this week. Fed Chair Kevin Warsh noted that this decision came as the US economy appears to be strengthening in terms of hiring, private-sector income, and investment. On the macroeconomics front, weekly jobless claims fell by -10K, settling at 196k. Based on these elements, markets now anticipate a continuation of the Fed’s monetary tightening cycle for the remainder of 2026.
MAD evolution and foreign exchange market liquidity indicators
The dirham under pressure for the second week in a row
The USD/MAD appreciated by +1.31%, reaching 9.52 by the end of the week, its sharpest rise since April 2025. This was driven by a double effect unfavorable to the Dirham for the second week straight. On the one hand, a basket effect of +0.68%, linked to the Dollar’s strong appreciation on the international market this week. On the other hand, a liquidity effect of +0.63%, reflecting a new tightening of the Dirham liquidity conditions on the Moroccan interbank foreign exchange market. Against this backdrop, liquidity spreads stood at -0.8% at the weekly close.
Volatility indicators
The Fed tightens its policy in the face of persistent inflation
The Fed raised its Fed funds rate by +25 bps this week, in response to inflation that remains above its 2% target. At the same time, Brent fell by -0.71%, while holding at $104/bbl, amid persistent tensions in the Middle East. These developments confirm the entrenchment of inflationary pressures, sustaining high volatility in the markets. We therefore recommend that operators continue to hedge their positions over short-term horizons.
EUR/USD outlook – BLOOMBERG
Brokers’ forecasts were revised over the long term this week. The pair is expected to trade around 1.16 in Q4-26, before reaching 1.17 in Q1-27, a level at which it should stabilize until Q2-27. In Q3-27, the target is expected to be 1.18. For 2027, the pair should continue to trade around 1.19. Over the long term, it is expected at 1,19 for 2028, up from 1.18 last week, and 1.20 for 2029.
The Fed decided to raise its fund rate by +25 bps this week, bringing it into the [3.74%-4.00] range, in response to CPI that remains off target. On the macroeconomics front, continuing jobless claims stood at 1,730K, versus a consensus of 1,780K. In addition, the Philadelphia Fed index for September came in at 37.8, versus an expected 31.3. Against this backdrop, markets now anticipate at least one additional hike of +25 BPS from the Fed by the end of 2026, according to the CME FedWatch tool.
On the Eurozone side, the ZEW Economic Sentiment index for September came in at 25.8, versus a consensus of 39.2, confirming the impact of inflationary pressures on German investor sentiment. Industrial production for July came in stable, at -0.1%. In the same wake, August CPI rose by +0.3%, to stand at 3.2%. Based on these developments, investors now anticipate a +25 BPS interest rate hike from the ECB at its October monetary policy meeting, according to the ECB Watch tool.
Upward review of our forecasts at the 1-month 2-month and 3-month horizons
Given the EUR/USD parity forecasts and foreign exchange market liquidity conditions, we have revised our USD/MAD projections upward for the 1-month, 2-month, and 3-month horizons.
Broker expectations for EUR/USD point to an appreciation of the Euro against the Dollar over the 1- to 3-month horizons, relative to spot levels.
Dirham liquidity spreads, for their part, are expected to gradually narrow over the 1-month, 2-month, and 3-month horizons, compared to current levels.
Under these conditions, target levels for the USD/MAD parity come in at 9.54, 9.56, and 9.59 over the 1-month, 2-month, and 3-month horizons, against a spot level of 9.51.
The Target levels for the EUR/MAD parity come in at 10.95, 10.98, and 11.01 at the 1-month, 2-month, and 3-month horizons, against a spot level of 10.92.
