International highlights
The Dollar Under Pressure on Inflation Data
The EUR/USD pair appreciated by 0.20% this week, moving from 1.1416 to 1.1439. The release of disappointing macroeconomic data, particularly on U.S. inflation, weighed on the Dollar this week. On one hand, the annual CPI fell by 0.7% to 3.5% in June, reflecting a marked inflation decline. On the other hand, the June PPI came in at -0.3%, versus a consensus of 0.0%, signalling pronounced deflationary pressure on Producer Prices. On the basis of these results, and in an environment marked by a resurgence of tensions in the Middle East, markets are pricing in a next Fed Funds rate hike from September 2026 onwards.
MAD evolution and foreign exchange market liquidity indicators
The Dirham Supported by a Dual Effect this Week
The USD/MAD pair depreciated by 0.13% this week, reaching 9.33. This move was driven by a dual favourable effect on the Dirham. The basket effect came in at -0.02%, linked to the depreciation of the greenback on the international market this week. The liquidity effect stood at -0.11%, reflecting a continued easing of liquidity conditions on Morocco's interbank foreign exchange market. In light of these developments, liquidity spreads eased by -10.6 BPS, settling at -2.9% at the end of the week.
Volatility indicators
Dollar retreat and Brent surge on escalating U.S.-Iran conflict
The Dollar index (DXY) fell by -0.19% over the week, settling at 100, reflecting the impact of declining inflation on the greenback. Meanwhile, Brent crude surged to $88/bbl, posting a monthly high following the escalation of the conflict between the United States and Iran. In this tense environment, volatility on foreign exchange markets rose sharply this week, reinforcing our recommendation to hedge transactions over short-term horizons.
EUR/USD outlook – BLOOMBERG
Broker forecasts for EUR/USD were revised downward on a medium-to-long-term basis this week. The pair is expected to trade around 1.15 in Q3 2026, before reaching 1.16 in Q4 2026. For Q1 2027, the pair is now expected at 1.16, versus 1.17 the previous week. For Q2 2027, the target remains unchanged at 1.17. For full-year 2027, the pair is projected to hover around 1.18. Over the longer term, the pair is now expected at 1.16 for 2028, versus 1.18 last week. For 2029, the target is expected to reach 1.16, versus 1.19 a week earlier.
U.S. macroeconomic releases weighed heavily on the Dollar this week. Inflation stood at 3.5% year-on-year through June, versus 4.2% the previous month. The core June PPI came in at 0.2%, below the forecast of 0.3%, reflecting a slowdown in selling prices for goods and services. Meanwhile, initial jobless claims fell by 8,000 to 208,000 this week. In light of these developments, markets now price in a +25 BPS Fed Funds rate hike starting from Septembre, according to the CME FedWatch tool.
On the Eurozone side, the annual CPI printed in line with expectations at 2.8% in June. Industrial production in the bloc declined by 0.5% in June, settling at -0.2%. Under these conditions, investors are pricing in two +25 BPS European Central Bank (ECB) rate hikes, in September and December respectively, according to the ECB Watch tool.
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 9.33.
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 10.67.
