EUR/ILS Outlook:
The EUR/ILS rate is currently below its recent average and is near the lower end of its three-month range, indicating a bearish outlook. The euro faces pressure primarily from geopolitical tensions, while the shekel remains strong due to improved economic indicators.
Key drivers:
- Rate gap: The European Central Bank has maintained its interest rate, while the Bank of Israel recently lowered its rate, enhancing the allure of the shekel.
- Risk/commodities: Current oil prices are high and volatile, which can increase inflationary pressures in Europe, potentially hurting the euro's value.
- One macro factor: The ongoing Russia-Ukraine conflict continues to create uncertainty for the euro, impacting its stability across markets.
Range:
EUR/ILS is likely to drift within its recent range, with pressure from current geopolitical tensions.
What could change it:
- Upside risk: A resolution or de-escalation of the Russia-Ukraine conflict could strengthen the euro.
- Downside risk: Further strength in the shekel due to positive economic data from Israel could push the EUR/ILS lower.
