EUR/ILS Outlook:
Slightly weaker, but likely to move sideways as the rate is below its recent average and near recent lows.
Key drivers:
- Rate gap: The European Central Bank has held its interest rate steady, while the Bank of Israel recently cut rates, benefiting the shekel against the euro.
- Risk/commodities: Oil prices are above average, which may increase inflation concerns in the Eurozone, potentially weighing on the euro.
- One macro factor: Eurozone inflation has fallen below its target, suggesting that further ECB rate cuts could be possible, leading to additional euro weakness.
Range:
The EUR/ILS is likely to hold within its recent range, showing limited movement without a strong directional bias.
What could change it:
- Upside risk: A surprising hike in ECB interest rates could support the euro.
- Downside risk: A significant drop in oil prices could further weaken the euro against the shekel.
