International highlights
The Dollar Supported by Macroeconomic Releases
The EUR/USD pair depreciated by -1.18% this week, reaching the 1.1522 level. The lack of progress in Middle East peace negotiations, coupled with strong U.S. macroeconomic data, supported the USD over the period. The ISM Manufacturing PMI for May came in at 54.0, above the consensus estimate of 53.3. Meanwhile, weekly jobless claims rose by 11,000 to 225,000, while the May unemployment rate printed in line with market expectations at 4.3%. On the Eurozone side, Q1-2026 GDP contracted by -0.2%, falling short of the +0.1% forecast. In light of these developments, investors are pricing in a 25 basis point (BPS) rate hike by the ECB at this week's scheduled monetary policy meeting.
MAD evolution and foreign exchange market liquidity indicators
A Double Adverse Effect on the Dirham This Week
The USD/MAD pair appreciated by +0.16% this week, settling at 9.21. This move was driven by a dual adverse effect on the Dirham over the period. On one hand, a basket effect of +0.14%, linked to the broad-based strengthening of the U.S. Dollar internationally over the period. On the other hand, a liquidity effect of +0.02%, reflecting a slight tightening of liquidity conditions on Morocco's interbank foreign exchange market. In fact, liquidity spreads consequently tightened marginally by +1.9 BPS, settling at -3.26%.
Volatility indicators
Volatility in Exchange Rates Fuelled by the Energy Shock
Against a backdrop of heightened geopolitical tensions and a significant surge in oil prices, Brent crude averaged $103.71/bbl in May 2026, compared to $64.01/bbl in the same month of the prior year, representing a year-on-year jump of +62%. This rebound confirms the magnitude of the ongoing energy shock, fuelling currency volatility and weighing on the growth outlook of hydrocarbon-importing economies. In this context, we recommend that market participants favour short-term hedging strategies.
EUR/USD outlook– BLOOMBERG
Broker forecasts for the EUR/USD pair were revised upward on a long-term basis this week. The pair is expected to trade at 1.17 in Q3 2026, before reaching 1.18 in Q4 2026. For Q1 2027, the target is set at 1.18, then at 1.19 in Q2 2027, compared to a previous forecast of 1.17. For full-year 2027, the pair is projected to reach 1.20, versus 1.19 expected a week earlier. Further out, the target stands at 1.21 for 2028 and 1.22 for 2030.
In the United States, April JOLTS job openings came in at 7,618K, well above the consensus estimate of 6,860K, representing a beat of +758K, reflecting persistently strong labour demand and a particularly resilient U.S. labour market. The May unemployment rate printed in line with expectations at 4.3%, further confirming the solid state of the job market. Against this backdrop, markets are pricing in a hold at the upcoming June Federal Open Market Committee (FOMC) meeting, followed by a +25 BPS rate hike expected towards year-end, according to the CME FedWatch tool.
On the Eurozone side, quarterly GDP sharply contracted to -0.2%, versus expectations of +0.1%, reflecting the drag from the steep rise in energy costs on economic activity across the bloc. Additionally, the HCOB Services PMI for May came in at 47.7, above the consensus forecast of 46.4. In this environment, investors are pricing in two +25 BPS rate hikes by the ECB in 2026, in June and October respectively, bringing the deposit facility rate to 2.50% by year-end.
Maintaining our forecasts over 1- 2- 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 current spot levels.
Dirham liquidity spreads are expected to stabilize at the 1-month horizon, before easing slightly at the 2-month and 3-month horizons compared to current levels, ahead of the onset of the summer season.
Under these conditions, the USD/MAD target levels stand at 9.18, 9.13 and 9.13 at the 1-month, 2-month and 3-month horizons respectively, against a current spot level of 9.21.
The EUR/MAD target levels stand at 10.76, 10.70 and 10.70 at the 1-month, 2-month and 3-month horizons respectively, against a current spot level of 10.69.
