From: Santa Rosa, CA
It's fairly normal to have to give the AI more help than normal if it is the attacking side. In this case, it is the initial attacker, but once the initial attack is done, the general weakness of the German forces and the substantial Allied reinforcements makes it unwilling to attack. The AI is generally built for the campaigns, and it's hard to get it to think in terms of special small scenario situations. In this case, if you want a challenge from the AI, you'll need to give it even more help. 125 morale help on top of Challenging might make enough difference. I'd suggest trying Battle of Tunisia which is a more indicative of the entire situation in North Africa, and ultimately requires the Allies to attack to win. Good luck.
All understanding comes after the fact.
-- Soren Kierkegaard