Recent forecasts indicate a weakening trend for the US dollar (USD) against the Egyptian pound (EGP). Analysts have noted that the USD has been under pressure due to expectations surrounding aggressive interest rate cuts from the Federal Reserve, with potential rate reductions anticipated as early as 2026. The latest economic data points to a decrease in inflation from 3% to 2.7%, contributing to the perception that the Fed may pursue a dovish monetary policy, thereby diminishing the USD's appeal.
The US Dollar Index (DXY) has shown signs of retreating from its peaks, as mixed economic indicators suggest slowing growth, although the labor market remains robust. This combination of factors, particularly the fading demand for the USD as a safe haven and rising global risk sentiment, is expected to exert further downward pressure on the dollar.
On the Egyptian side, the Central Bank of Egypt (CBE) has implemented a series of interest rate cuts, with a 100 basis point reduction in October, aimed at stimulating economic growth. The EGP has benefited from increased foreign currency inflows, particularly due to a significant rise in remittances, which surged by nearly 70% over the year. These inflows, along with a favorable economic growth projection of 5.5% for 2026, reflect a strengthened outlook for the EGP.
Currently, the USD to EGP exchange rate stands at around 47.55, which aligns closely with the three-month average. Notably, the exchange rate has remained stable within a narrow range of 2.7%, trading between 46.98 and 48.25. This stability, coupled with expectations of further easing in U.S. monetary policy and a robust economic trajectory for Egypt, suggests that the EGP may continue to strengthen against the USD in the near-term outlook. Monitoring the upcoming inflation prints and Fed communications will be crucial in assessing the next movements in this currency pair.
