In recent months, the EUR to ILS exchange rate has experienced fluctuations influenced by various economic and geopolitical factors. Currently, the euro is trading at around 3.7686 ILS, marking a significant 2.3% drop below its three-month average of 3.8574 ILS. This suggests a period of relative stability, within a range that has seen lows of 3.7091 and highs of 3.9777 ILS.
Several developments are shaping the euro's trajectory. Analysts note that the European Central Bank (ECB) recently adopted a more dovish monetary policy, with indications that interest rates, currently at 4.0%, may be cut to 3.5% by late 2025. This shift is expected to narrow the interest rate differential with the U.S. Federal Reserve, potentially applying downward pressure on the euro. Furthermore, ongoing geopolitical tensions, particularly from the war in Ukraine, continue to impact investor sentiment towards the eurozone, introducing volatility into the currency markets.
In Israel, the Israeli new shekel (ILS) has shown strength, with recent data indicating a decline in inflation to 2.5%, falling within the central bank's targeted range. This improvement could prompt the Bank of Israel to consider monetary easing, which would further strengthen the shekel against other currencies, including the euro. Additionally, UBS has revised its forecasts for the USD/ILS rate down, anticipating further depreciation of the U.S. dollar, which could also support the shekel.
Global oil prices are another factor affecting the EUR/ILS exchange rate. Currently, oil trades at around $64.20, slightly below its three-month average of $65.62 and having seen significant price volatility within a range from $60.96 to $70.13. Fluctuations in oil prices can indirectly influence the euro's strength, given the eurozone's reliance on energy imports.
Overall, the euro's outlook against the shekel is shaped by a complex interplay of monetary policy shifts, geopolitical developments, and economic conditions in both the eurozone and Israel. As market sentiment continues to evolve, businesses and individuals engaged in international transactions should remain vigilant to these factors in order to optimize their currency exchange strategies.
