International highlights
Fed : Another rate cut widely anticipated
The EUR/USD pair appreciated by +0.38% this week, increasing from 1.1598 to 1.1642. Weak US economic data reinforced expectations of a rate cut at the next FOMC meeting on December 10th, which weighed on the Dollar this week. Indeed, the manufacturing and services PMI indices decreased in November, supporting the scenario of a US economic growth slowdown. Note that, at the end of the week, the Core PCE Consumer Price Index came out at 2.8% in September, down from 2.9%, which also convinced markets of a rate cut at the next FOMC meeting.
MAD evolution and foreign exchange market liquidity indicators
The Dollar weakens this week
The USD/MAD pair depreciated by -0.48% this week, falling from 9.28 to 9.23. This variation was driven by two negative factors favourable to the Moroccan Dirham. On the one hand, a basket effect of -0.45% after the weakness of the Dollar against the Euro this week. On the other hand, the liquidity effect came out also negative at -0.03%, reflecting a slight improvement of liquidity conditions. In this context, liquidity spreads eased by -3 basis points to -2.79% this week. However, the expected trend of spreads would reflect a tightening of liquidity conditions gradually over the coming weeks.
Volatility indicators
The Fed's next decisions remain uncertain
Weak economic data in the United States should prompt the Fed to keep up its accommodative stance. However, the Fed's next decisions remain uncertain due to the delayed release of crucial employment and inflation reports, which is likely to fuel volatility on the short term. Therefore, we recommend traders to hedge their transactions over 1 month to 3 months.
EUR/USD outlook – BLOOMBERG
Brokers' forecasts for the EUR/USD pair were slightly reviewed upwards this week. The pair is now expected to trade at 1.18 in Q1 2026. It is projected to stabilize at 1.18 in Q2 2026, compared to 1.19 the previous week. It is expected to rise to 1.19 in Q3 2026 and reach 1.20 over the 2026-2029 period.
In the United States, inflation came out at 3.0% in September after 2.9% in August, and the PCE Core index stood at 2.8% in September after 2.9% in August. Despite inflation remaining above the 2% target, the Fed decided to cut rates by -25 basis points each in September and October in response to the weak labor market. The Fed Funds rate is now in the range of 3.75% to 4.00%. Following weak economic data in the United States this week, markets are now widely expecting another Fed Funds rate cut of -25 basis points on December 10th.
In the Euro Zone, inflation rebounded slightly to 2.2% in November after 2.1% in October. Inflation remains close to the European Central Bank's (ECB) target of 2%. After a year of monetary easing, the ECB decided a monetary pause in July following the progress made on inflation. In the ST and MT, the ECB's monetary policy is expected to remain neutral, while the Fed's is expected to continue its accommodative course. The narrowing of the interest rate divergence between the United States and the Euro Zone explains the bullish EUR/USD forecasts on the ST and MT compared to the spot level.
Upward review of our 1 month, 2 month and 3 months horizon forecasts
Given the EUR/USD exchange rate forecasts and liquidity conditions in the foreign exchange market, we have reviewed our USD/MAD pair forecasts upwards for the 1-month, 2-month, and 3-month horizons.
Brokers' EUR/USD exchange rate forecasts indicate an appreciation of the Euro against the Dollar over the next 3 months, compared to spot levels.
Liquidity spreads for the Dirham are expected to gradually tighten over the next 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 in 1 month
- 9,31 in 2 months
- 9,35 in 3 months
compared to a spot rate of 9.23
The target levels for the EUR/MAD exchange rate are :
- 10,88 in 1 month
- 10,94 in 2 months
- 10,99 in 3 months
against a spot level of 10.76
