USD/XOF Outlook:
Slightly weaker, but likely to move sideways as the rate is below its recent average and trading near recent lows.
Key drivers:
• Rate gap: The Federal Reserve's decision to hold interest rates steady contrasts with pressures on the USD from trade tensions.
• Risk/commodities: With oil prices remaining lower than average, the USD could face additional headwinds as the US economy may slow down.
• One macro factor: Recent job growth in the US may support the USD, but geopolitical tensions add uncertainty that could limit its recovery.
Range:
USD/XOF is likely to drift within its recent range, as there's no clear direction pushing it significantly higher or lower.
What could change it:
• Upside risk: A stronger-than-expected recovery in the US labor market or positive economic data could boost the USD.
• Downside risk: Escalating tensions in trade policies that affect investor confidence in US assets could further weaken the USD.
