EUR/USD: What are the prospects for the coming months?

International highlights

Dollar supported by safe haven demand this Week

The EUR/USD pair depreciated by -0.60% this week, moving from 1.1439 to 1.1370. The Dollar was bolstered by demand for safe-haven assets, amid a context of heightened tensions in the Middle East. On the macroeconomic front, weekly jobless claims in the United States declined by -22K to 187K, their lowest level since January 2024. On the other hand, in the Euro Zone, the July ZEW index came in at 23.4, up from 9.5 a month earlier. Against this backdrop, the European Central Bank (ECB) opted for a monetary status quo at its monetary policy meeting held this week. Meanwhile, markets continue to anticipate a similar decision from the Fed following its July FOMC meeting.

MAD evolution and foreign exchange market liquidity indicators

Dirham penalized by a Twofold Adverse Effect

The USD/MAD rose by +0.40% this week, moving from 9.33 to 9.36. This trend stems from a twofold effect unfavorable to the Dirham. On the one hand, the basket effect stood at +0.28%, in line with the Dollar's appreciation on international markets. On the other hand, the liquidity effect came in at +0.12%, reflecting a tightening of liquidity conditions on the Moroccan interbank FX market. Liquidity spreads thus narrowed by +12.1 bps, reaching -2.8% at week's end.

Volatility indicators

Brent surge rekindles inflationary concerns

In the wake of the escalating US-Iran conflict, Brent crude prices surged sharply to reach USD 97/bbl at week's end, remaining close to their highest monthly levels. This development is reviving inflationary concerns among markets, which will be closely monitoring upcoming macroeconomic releases as well as any potential monetary policy decisions. Against this uncertain backdrop, volatility on currency markets is expected to remain pervasive. We, therefore, recommend that operators hedge their transactions over ST horizons.

EUR/USD outlook – BLOOMBERG

Brokers' forecasts remained stable this week. The pair is expected to trade around 1.15 in Q3-26, before reaching 1.16 in Q4-26, a level at which it should stabilize through Q1-27. In Q2-27, the target remains set at 1.17. For full-year 2027, the pair is expected to stand at around 1.18. Over the longer term, it is forecast at 1.16 for both 2028 and 2029.

The latest US indicators point to a mixed macroeconomic backdrop. Indeed, weekly jobless claims posted a decline of -22K, compared with 209K recorded a week earlier. The S&P Global flash services PMI for July came in at 53.6, versus 53.9 a month earlier. Moreover, June existing home sales came in at 4.09M, against a consensus of 4.20M. In this environment, investors continue to anticipate a monetary status quo from the Fed following the July 2026 FOMC, according to the CME FedWatch tool.

In the Euro Zone, the July ZEW economic sentiment index reflects genuine optimism, with a rebound of +13.9 points compared with June. Against this backdrop, the ECB decided this week to keep its rates unchanged, pending an assessment of the inflationary impact of the renewed escalation in the US-Iran conflict.

Maintaining our forecasts at the 1-month 2-month and 3-month horizons

In light of EUR/USD forecasts and liquidity conditions on the foreign exchange market, we have maintained our USD/MAD projections at 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 are expected to ease at the 1-month horizon, and stabilize at the 2-month and 3-month horizons, relative to current levels.

Under these conditions, the USD/MAD target levels stand at 9.28, 9.28 and 9.28 at the 1-month, 2-month and 3-month horizons respectively, against a spot level of 9.36.

The EUR/MAD target levels stand at 10.60, 10.60 and 10.60 at the 1-month, 2-month and 3-month horizons respectively, against a spot level of 10.66.