Forex market: EUR/USD under pressure from trade tensions
The EUR/USD pair depreciated by -0.42% to 1.1250. The announcement of talks between senior US and Chinese officials in Geneva on Saturday revived investors’ optimism regarding trade tensions cooling between the two countries. Meanwhile, the conclusion of a bilateral trade agreement between the US and the UK, which sets a base tariff of 10% on US imports, contributed to the prospect of new trade agreements with other countries, strengthened the Dollar this week.
The Federal Open Market Committee (FOMC) meeting in May ended on the decision to pause monetary policy, as widely anticipated by financial markets.
Forex market: USD/MAD trends
The USD/MAD pair depreciated by -0.15%, falling from 9.27 to 9.25 this week. This was due to two opposing effects. On the one hand, a positive basket effect of +0.49% related to the Dollar's appreciation this week. On the other, a negative market effect of -0.64% after the continued easing of liquidity conditions for the dirham. The Dirham's liquidity spreads thus continued to improve by -62 BPS to their lowest levels in more than three years, at -4.67%, thanks to lower import flows related to the decline of energy prices. These levels are getting closer to the lower band of the Dirham's fluctuation band, at -5.0%.
Concerns about global economic growth
Uncertainties related to trade tensions, particularly between the United States and China, are rekindling concerns about global economic growth and fueling international currency volatility. As such, significant currency volatility is expected. We recommend traders to hedge their trades over time horizons of 1 to 3 months.
