International highlights
The ECB decides a monetary pause in December
The EUR/USD pair depreciated by -0.26% this week, decreasing from 1.1740 to 1.1710. Following the longest government shutdown in US history, the US Non-Farm Payrolls (NFP) report, combining the months of October and November, has been released this week. Job creation in the non-farm sector fell by -105K in October and rose by +64K in November. The US unemployment rate thus reached 4.6% in November, its highest level since 2021. Meanwhile, inflation came out at 2.7% in November, down from 3.0% in September. In the Euro Zone, the ECB decided to pause its monetary policy, maintaining the deposit facility rate at 2.00%.
MAD evolution and foreign exchange market liquidity indicators
An improvement of MAD liquidity this week
The USD/MAD pair depreciated by -0.33% this week, going from 9.20 to 9.17. This evolution was driven by a negative liquidity effect of -0.43% after an easing of liquidity conditions of the Dirham. The basket effect, on the other hand, came out positive in favor of the Dollar at +0.10%, after the Euro's depreciation against the Dollar this week. In this context, liquidity spreads improved by -42 BPS to -3.18% this week. It is worth noting that Bank Al Maghrib's decision to maintain its key rate stable in December 2025 supports a stable macroeconomic framework for the MAD's exchange rate.
Volatility indicators
FED : An uncertain pace of monetary easing in 2026
In 2025, the Fed has cut its interest rates by -75 BPS to the range between 3.50% and 3.75% in order to address the cooling of the labor market. The faster-thanexpected decrease of inflation in November would give the Fed more flexibility in its future monetary policy decisions. In this uncertain environment, we recommend traders to hedge their transactions over 1 to 3 months.
EUR/USD outlook– BLOOMBERG
Brokers' forecasts for the EUR/USD pair have been reviewed globally upwards this week. The pair is now expected to trade at 1.18 in Q1-2026 and then at 1.19 in Q2-2026, compared to 1.18 the previous week. It is expected to stabilize at this level until 2027. For the 2028-2029 period, the target is 1.21, compared to 1.20 the previous week.
In the United States, inflation fell faster than expected to 2.7% in November, after 3.0% in September. Despite inflation still standing above the 2% target, the Fed decided a -25 BPS cut in December to address the weakness of the labor market. The Fed Funds rate now stands in the range between 3.50% and 3.75%. Note that markets are currently anticipating a monetary pause at the next FOMC meeting in January 2026 and one or two rate cuts of -25 BPS in 2026, according to the CME FedWatch tool.
In the Eurozone, inflation came out stable at 2.1% in November, according to the latest Eurostat figures. Inflation remains close to the ECB's target of 2%. After a year of monetary easing, the ECB decided a monetary pause in July 2025 after the progress made on inflation. In the ST and MT, the ECB's monetary policy is expected to remain neutral, while the Fed is expected to continue its accommodative course. The narrowing of the interest rate divergence between the United States and the Eurozone would explain the upward pressure on the EUR/USD exchange rate in the ST and MT compared to the spot level.
We maitain our 2 months and 3 months horizon forecats
Given the EUR/USD exchange rate forecasts and liquidity conditions in the foreign exchange market, we have maintained our USD/MAD pair forecasts for the 1-month, 2-month, and 3-month horizons.
Brokers' EUR/USD exchange rate forecasts indicate a slight appreciation of the Euro against the Dollar over the 3-month horizon, compared to spot levels.
Dirham liquidity spreads are expected to gradually tighten over the 1-month, 2-month, and 3-month horizons compared to spot levels.
Under these conditions, the target levels for the USD/MAD exchange rate are :
- 9,26 at 1 month
- 9,26 at 2 months
- 9,31 at 3 months
compared to a spot rate of 9.17
The target levels for the EUR/MAD exchange rate are :
- 10,88 at 1 month
- 10,88 at 2 months
- 10,94 at 3 months
against a spot level of 10.74.
