Bias: Bearish-to-range-bound, as EUR/ILS is below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: The Bank of Israel's recent rate cut to 4% contrasts with the European Central Bank's neutral stance, favoring the ILS.
- Risk/commodities: Oil prices have been volatile, sitting above average, which can increase import costs for the eurozone and weigh on the EUR.
- Economic forecasts: Israel's GDP growth projection at 5.2% for 2026 signals economic resilience, supporting the strength of the ILS.
Range: Movement for EUR/ILS is likely to hold within the recent range, as both currencies face external pressures and have experienced limited directional changes.
What could change it:
- Upside risk: An unexpected shift in ECB policy tightening could strengthen the euro.
- Downside risk: Continued geopolitical tensions or falling oil prices could further impact the euro's performance and lead to deeper declines.
