MAD For It

The dirham is facing stiff resistance around MAD8.2/US$, a level that held firm in April this year and in 2005. In the short term we see this level holding, and then MAD weakening towards trendline support at MAD8.4/US$. We could then see a move through the MAD8.2/US$ level, with MAD8.0/US$ our medium term upside target. Essentially, the dirham's trajectory depends on the euro given that it is pegged to a basket of currencies with a heavy euro weighting, and has gained 3.6% since the beginning of the year against the dollar. As such, a dollar fall through the EUR1.3660-1.3770

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