USD/EGP Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and trading near mid-range levels.
Key drivers:
- Rate gap: The US Federal Reserve is expected to cut rates in 2026, which may pressure the USD against the EGP.
- Risk/commodities: The volatility in geopolitical events, specifically related to US military actions, is affecting investor confidence in the USD.
- One macro factor: The strengthening of Egypt's net international reserves signals a more stable economic outlook for the EGP.
Range: The USD/EGP is likely to hold steady within its recent trading range as current conditions are stabilizing.
What could change it:
- Upside risk: A reduction in geopolitical tensions could strengthen the USD.
- Downside risk: Higher-than-expected inflation in the US could further weaken the dollar.
