EUR/ILS Outlook:
The EUR/ILS rate is currently below its 90-day average and is situated near recent lows. As a result, the outlook appears slightly weaker, but likely to move sideways without a clear driver pushing it one way or the other.
Key drivers:
• Rate gap: The European Central Bank continues its accommodative monetary policy, while the Bank of Israel recently cut interest rates to support economic growth, providing a yield advantage to the ILS.
• Risk/commodities: Oil prices are trading at multi-month highs, which can strengthen currencies like the ILS, typically affected by higher energy costs.
• One macro factor: The recent strengthening of the shekel reflects improved investor confidence driven by geopolitical stability, especially after the ceasefire in Gaza.
Range:
The EUR/ILS is likely to hold steady within its recent range, neither testing extremes nor drifting significantly in either direction.
What could change it:
• Upside risk: Any significant improvement in Eurozone economic indicators could lead to a stronger euro.
• Downside risk: Further cuts in Israeli interest rates amid easing inflation could increase pressure on the euro against the shekel.
