EUR/ILS Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and trading near recent lows.
Key drivers:
• The European Central Bank remains cautious, with no immediate rate changes expected. This contrasts with the Bank of Israel’s recent interest rate cut, which favors the shekel.
• Oil prices are trading above their 3-month average, potentially impacting inflation expectations in the Eurozone and posing risks for the euro.
• Despite modest economic growth in the Eurozone, concerns linger about the euro’s export competitiveness and its response to geopolitical tensions in the region.
Range: The EUR/ILS is likely to drift within the recent range as broader market factors play out.
What could change it:
• Upside risk: A stronger-than-expected rebound in Eurozone economic data could support the euro.
• Downside risk: Continued geopolitical tensions worsening could pressure the euro lower against the shekel.