The EUR to ILS exchange rate is currently positioned at 14-day highs near 3.8045, which is approximately 1.4% below its three-month average of 3.8567. The currency pair has exhibited relative stability, trading within a 7.2% range between 3.7091 and 3.9777 recently. Analysts note that the euro has been influenced by a quiet Eurozone economic calendar, which has resulted in limited directional movement against the shekel. The weakness of the US dollar has provided some modest support for the euro, allowing it to stabilize.
Looking ahead, forecasts indicate that the euro may face challenges due to recent dovish shifts by the European Central Bank (ECB). After raising interest rates to combat inflation in 2024, the ECB is expected to cut rates further by late 2025 in response to slowing economic growth. This potential reduction is likely to narrow the interest rate differential with the U.S. Federal Reserve, thereby influencing investor sentiment towards the euro.
In contrast, the Israeli new shekel has been appreciating against major currencies, backed by declining inflation rates, improved economic sentiment, and a reduction in geopolitical risk following recent ceasefires in the region. UBS's forecast suggests further strengthening of the shekel, reflecting stronger economic fundamentals that may continue to support its value against the euro.
Furthermore, the euro's fluctuations could also be affected by global oil price movements. Currently, oil is trading at $64.89, slightly below its three-month average, and has shown volatility in the market. Since the euro is sensitive to oil price changes, any significant upward or downward movements may directly impact the EUR to ILS exchange rate.
Overall, developments such as the ECB's monetary policy adjustments, geopolitical stability in Israel, and global oil price dynamics will be crucial in determining the future trajectory of the EUR to ILS exchange rate.
