How does the US dollar maintain balance against the Egyptian pound amid economic recovery

Following the beginning of February, the Egyptian foreign exchange markets experienced a significant turning point as the US dollar achieved relative stability against the Egyptian pound. This stability did not happen by chance but resulted from the implementation of a coordinated strategy by the Central Bank of Egypt, combining cautious flexibility with precise liquidity control.

The US dollar traded around 47.15 pounds in the morning sessions, reflecting a balance between supply and demand forces in the market. Major banks like the National Bank of Egypt and Banque Misr recorded nearly identical trading rates, while private financial institutions such as CIB and Abu Dhabi Islamic Bank showed very narrow differences between buy and sell prices, indicating the disappearance of traditional price gaps.

Technical Performance of the US Dollar: Key Indicator Analysis

From a technical perspective, analyzing the dollar’s behavior against the pound presents a complex picture requiring an in-depth study of moving averages and strength indicators. The 50-day simple moving average is positioned at around 47.45 pounds, while the longer-term (200-day) average is slightly higher, suggesting an approaching “death cross” scenario.

This crossover could carry negative short-term implications for the US dollar, indicating expected weakness in upward momentum. The Relative Strength Index (RSI) hovers around 42, a neutral zone with a tendency toward oversold conditions for the dollar. This means there is insufficient buying pressure to push the currency higher, while selling pressures remain stable.

Economic Support Behind Stability: Growth, Tourism, and Vital Channels

The current economic environment provides strong backing for the pound’s stability and the maintenance of the dollar’s balance. The Ministry of Planning announced a 5.3% economic growth in the first quarter of the fiscal year, reflecting genuine economic dynamism. Additionally, the Suez Canal has fully regained its shipping momentum, ensuring steady dollar inflows.

The tourism sector’s return to record levels has also contributed to foreign currency liquidity. These factors together form what can be called the “economic trinity,” which has helped boost foreign investor confidence in direct investments. The net foreign assets of the banking sector have increased significantly, supporting the pound’s strength against the US dollar.

Real Interest Rates and Foreign Investments: Drivers of Stability

The real interest rates on Egyptian financial instruments have become increasingly attractive to global investment funds. This attraction has led to a steady flow of foreign direct investments, which in turn has provided the necessary support to keep the dollar stable at current levels. Analysts believe this dynamic could continue as long as interest rates remain attractive and the economy continues to improve.

Global Institutional Outlook: Where Will the US Dollar Go?

International financial institutions offer various insights into the expected trajectory of the dollar in the coming period:

Fitch Solutions predicts that the dollar will remain within the range of 47 to 49 pounds throughout 2026, believing that structural reforms will provide ongoing support for stability. This forecast reflects the institution’s confidence in Egypt’s ability to maintain a positive economic trajectory.

Standard Chartered has revised its outlook to suggest the dollar could reach 47.5 pounds by the end of Q1, with inflation expected to decline to around 12%. This figure is a positive indicator of the local currency’s purchasing power stability.

International Monetary Fund emphasizes the role of exchange rate flexibility as a mechanism to protect against potential external shocks. The IMF expects economic growth to accelerate to 5.4% in the next fiscal year, supporting continued foreign investment inflows.

Support and Resistance Levels: Investor Roadmap

Understanding critical technical levels helps traders make informed decisions:

Resistance Levels: The first resistance for the dollar is at 47.80 pounds. Breaking this level would signal a return of upward momentum in favor of the dollar. The second resistance extends to 48.50 pounds, and surpassing this could indicate a fundamental shift in the pound’s outlook.

Support Levels: The first support is at 46.80 pounds, a strong psychological and technical level from which the price has bounced multiple times in recent weeks. If this support is broken, the dollar could slide toward 45.50 pounds, a second level that may serve as a crucial stopping point if economic data continues to show strength.

Challenges and Opportunities: Key Factors Shaping the Path

Despite apparent stability, several critical factors require close monitoring. External debt repayments exert periodic pressure on dollar liquidity, especially during due dates. On the other hand, the government’s privatization program and attracting Gulf direct investments are main drivers strengthening the pound against the dollar.

Market analysts are closely watching Egypt’s ability to reduce its debt-to-GDP ratio, as this metric is a strong indicator of sustainable economic recovery. Any improvement in this ratio enhances the pound’s position and reduces pressure on the dollar.

Conclusion: US Dollar Stability Reflects Genuine Economic Balance

The current stability of the US dollar against the Egyptian pound is not just a transient price movement but a reflection of real economic equilibrium supported by genuine growth and steady investment inflows. As long as these positive factors persist, the dollar is likely to maintain its balance without drastic movements in the near term. Continuous monitoring of technical and economic indicators will be key to understanding any future developments affecting the dollar and the pound.