USD/XOF Outlook:
The USD/XOF rate is currently slightly below its recent average but is likely to move sideways. This is driven by mixed market signals amid fluctuating USD and XOF fundamentals.
Key drivers:
- Rate gap: The US Federal Reserve's monetary policy is influencing the USD, while the West African Central Bank assures stability for the XOF, maintaining its euro peg.
- Risk/commodities: With recent drops in oil prices, the USD may be facing pressures, impacting its attractiveness against the XOF.
- One macro factor: US GDP figures reported a sharper decline, affecting confidence in the dollar's strength.
Range:
The USD/XOF is expected to drift within the recent range as both currencies face distinct pressures.
What could change it:
- Upside risk: A hawkish signal from the Federal Reserve could boost the USD.
- Downside risk: Continued negative economic signals from the US may weaken the USD further.
