International highlights
Interest rate expectations favorable to the Dollar
The EUR/USD pair depreciated by -0.34% to stand at 1.1598. This trend is explained by the release this week of better-than-expected US macroeconomic data. First, initial jobless claims in the United States came in at 198K, below the consensus forecast of 215K, confirming the continued resilience of the labor market. Second, retail sales for November rose by +0.6%, compared to a forecast of +0.5%. This dynamic has strengthened the case for a prolonged restrictive monetary policy, supporting the Dollar against the Euro.
MAD evolution and foreign exchange market liquidity indicators
MAD appreciation against the Dollar this week
Despite a basket effect of +0.17% negative for the MAD, linked to the appreciation of the Dollar against the Euro this week, the MAD appreciated slightly against the Dollar this week. Indeed, the USD/MAD exchange rate stand at 9.22, representing a weekly variation of -0.18%. This evolution was driven by a liquidity effect of -0.35%, reflecting a favorable variation of the MAD. This trend can be explained by improved liquidity conditions on the interbank foreign exchange market. In this context, liquidity spreads have eased by +34 BPS to -3.10% this week.
Volatility indicators
ECB - Fed: Diverging monetary policies
In the Eurozone, the end of the European Central Bank's (ECB) fast monetary tightening cycle appears imminent, in the context of better-controlled inflation and solid economic growth. Meanwhile, internal political tensions in the US keep weighing on the Fed's future monetary policy guidance. In this uncertain context, we recommend traders to hedge their transactions over 1 to 3 months.
EUR/USD outlook– BLOOMBERG
Brokers revised their long-term EUR/USD forecasts downwards this week. The pair is now expected to trade at 1.17 in Q1 2026 before gradually standing up to 1.18 in Q2-2026 and then to 1.19 in Q3-2026 and Q4-2026. In 2027, it is expected at 1.20, against 1.22 a week earlier. Over the 2028-2029 period, it would continue its moderate upward trend, reaching 1.22 in 2028 and 1.21 in 2029, compared to the previously anticipated 1.25 and 1.26, respectively.
The release of solid macroeconomic data in the United States this week helped to ease fears of a fast monetary easing by the Fed, notably following the legal investigation involving its Chairman, Jerome Powell. Retail sales came in at +0.6%, above expectations of +0.5%, while weekly jobless claims fell by 9K to 198K. In this context, the Fed's Beige Book points to a moderate expanding economy, with no immediate tensions in the labor market. These elements have led markets to postpone expectations of a first rate cut of -25 BPS until the June 2026 FOMC meeting, according to the CME FedWatch tool.
In the Eurozone, the situation remains broadly under control, marked in particular by a decline in the unemployment rate in November 2025. In light of these developments, markets expect the ECB's deposit facility rate to remain unchanged at 2.00% throughout 2026, according to the ECB Watch tool.
We maintain our 1 month, 2 months and 3 months horizon forecats
Considering the EUR/USD parity forecast and liquidity conditions in the foreign exchange market, we have maintained our USD/MAD forecasts for the 1-month, 2-month and 3-month horizons.
The forecasts of the EUR/USD parity by the brokers point towards a slight appreciation of the Euro against the Dollar over the 3-month horizon, compared to spot levels.
The Dirham liquidity spreads are expected to gradually tighten over the next 1 month, 2 months and 3 months horizons compared to the spot levels.
Under these conditions, the target levels of the USD/MAD exchange rate stand at:
- 9,25 at 1 month
- 9,29 at 2 months
- 9,34 at 3 months
compared to a spot rate of 9.22
The target levels of the EUR/MAD exchange rate stand at:
- 10,80 at 1 month
- 10,86 at 2 months
- 10,91 at 3 months
against a spot level of 10.71.
