International highlights
The Dollar supported by employment data
The EUR/USD pair depreciated by -0.45% to settle at 1.1719 this week. This decrease was due, on the one part, to weekly unemployment claims being lower than expected, which came out at 199K, up 16K compared to the previous week, reducing thus the expectations of a future Fed rate cut. Otherwise, manufacturing activity in the Eurozone fell to its lowest level in nine months in December weighed on the Euro this week. Overall in 2025, the Dollar recorded its sharpest decline since 2017, resulting in a performance of +13.4% for the EUR/USD pair.
MAD evolution and foreign exchange market liquidity indicators
Appreciation of the Dollar this week
The USD/MAD pair appreciated by +0.27% this week, increasing from 9.11 to 9.14. This evolution was driven, on the one hand, by a basket effect of +0.33%, due to the appreciation of the Dollar against the Euro this week. The liquidity effect, on the
other hand, stood at -0.06% after an easing of liquidity conditions for the Dirham. In this context, liquidity spreads improved by -5 BPS to -3.39% this week. Note that by the end of 2025, the USD/MAD pair recorded a depreciation of -9.7%, due to favorable basket and liquidity effects on the Dirham.
Volatility indicators
American data at the heart of the expectations
The significant number of economic data releases expected this week, particularly the NFP report due at the end of the week, would provide crucial information regarding a further interest rate adjustment by the Federal Reserve. In this uncertain context, we recommend operators to hedge their transactions from 1 to 3 months.
EUR/USD outlook– BLOOMBERG
Brokers' forecasts for the EUR/USD pair have been stable this week. The pair is expected to trade at 1.18 in Q1-26 through Q2-26. It is projected to trade at 1.19 in Q3-26 and stabilize at that level in Q4-26 until 2027. Over the 2028-2029 period, it is expected to continue its upward trend to 1.23.
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 rate cut in December to address the weakness of the labor market. Fed Fund rates now stand in the range of 3.50% to 3.75%. Note that markets are currently forecasting a monetary pause by the next FOMC meeting in January 2026 and one or two rate cuts of -25 BPS each 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 European Central Bank's target of 2%. After one 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.
Upward review of 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 reviewed our USD/MAD pair forecasts upwards for the 1-month, 2-month, and 3-month horizons.
Brokers' EUR/USD exchange rate forecasts indicate a slight depreciation of the Euro against the Dollar over the next 3 months, compared to spot levels.
Dirham liquidity spreads 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:
- 9,24 at 1 month
- 9,28 at 2 months
- 9,33 at 3 months
compared to a spot rate of 9.14
The target levels for the EUR/MAD exchange rate are:
- 10,81 at 1 month
- 10,86 at 2 months
- 10,92 at 3 months
against a spot level of 10.72.
