The USD remains on a bearish trend against the XOF, notably influenced by recent economic indicators and policy expectations.
The key drivers for this sentiment include:
- Interest rate cuts anticipated from the Federal Reserve, which may weaken the USD as monetary easing continues through 2026.
- Economic growth projections indicate a potential boost in global commodity prices, impacting USD trading volatility.
- The expected decrease in the US Dollar Index suggests ongoing pressure on the USD as markets react to current-account deficits and valuation concerns.
In the near term, the USD to XOF exchange rate is expected to trade within a stable range, reflecting its proximity to the three-month average.
An upside risk could arise if US consumer sentiment improves, potentially supporting the USD. Meanwhile, the downside risk stems from the Alliance of Sahel States' plans to introduce a new currency, which could diminish the XOF's strength and stability.