USD/XOF Outlook:
The USD/XOF exchange rate is slightly weaker, but likely to move sideways, trading just below its recent average. This position within the recent range suggests stability amid ongoing factors that could impact both currencies.
Key drivers:
• Rate gap: The Federal Reserve's recent interest rate hikes have supported the USD, while the XOF remains stable due to the pending structural reforms in West Africa.
• Risk/commodities: Oil prices have shown volatility, which can impact USD strength due to its influence on the US economy. A rising oil price could support the USD further.
• One macro factor: The transition towards the new Eco currency in West Africa indicates a shift in monetary policy, which could affect the XOF's stability.
Range:
The USD/XOF is likely to hold within its recent range, not straying far from current levels.
What could change it:
• Upside risk: A significant announcement regarding US tariffs could bolster confidence in the USD.
• Downside risk: Increased political tensions related to currency reform could weigh on the XOF, affecting its value.