EUR/ILS Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and lacks a clear driver in either direction.
Key drivers:
• Rate gap: The European Central Bank is maintaining a neutral stance, while the Bank of Israel recently cut interest rates, helping to support the shekel.
• Risk/commodities: With oil prices at 90-day highs, the euro could be negatively influenced due to its correlation with the US dollar, which is currently strong.
• One macro factor: Positive economic forecasts for Israel, including projected GDP growth and moderating inflation, bolster the strength of the shekel.
Range: Movement in the EUR/ILS is expected to drift within the established recent range, as neither currency shows strong momentum at this time.
What could change it:
• Upside risk: A surprise ECB interest rate hike could lend support to the euro.
• Downside risk: Further strengthening of the shekel due to favorable economic news could push the EUR lower.