Bias: bearish-to-range-bound, as USD is below the 90-day average and sits in the lower half of the recent 3-month range.
Key drivers:
- Rate gap: BEAC tightened policy to defend the CFA franc while the Fed is expected to cut rates toward neutral in 2026, narrowing the USD's yield advantage and supporting the XAF.
- Macro factor: upcoming US payrolls and unemployment data to shape Fed easing expectations.
Range: USD/XAF is likely to drift within the 3-month range, staying near the lower end.
What could change it:
- Upside risk: stronger US payrolls data or a hawkish Fed tone lifting the dollar.
- Downside risk: clearer signs of Fed easing or a dovish tone from Fed officials.