USD/XAF Outlook:
The USD/XAF rate is likely to move sideways as it trades just below its recent average and is currently near its three-month highs. A stable demand for the US dollar keeps it strong, but without clear drivers pushing it significantly higher.
Key drivers:
• Rate gap: The Federal Reserve's interest rate strategy remains a key factor for the USD, attracting foreign investment and supporting its strength against the XAF.
• Risk/commodities: The US dollar's position could be sensitive to oil price trends, particularly as rising crude prices may affect economic conditions in the XAF region.
• One macro factor: The recent approval of the CEMAC 2026 budget aims to boost regional development, promoting positive economic conditions that could support XAF stability.
Range:
The USD/XAF is expected to hold steady within its recent range, with potential for slight fluctuations around the current levels.
What could change it:
• Upside risk: An unexpected tightening of Federal Reserve policy could strengthen the USD.
• Downside risk: Disappointing US economic data, such as falling durable goods orders, could pressure the USD lower.
