Recent analysis indicates that the EUR to ILS exchange rate is currently trading at 90-day lows of approximately 3.7091, reflecting a 4.1% decline from its three-month average of 3.8668. This relatively stable range of 3.7091 to 3.9777 suggests ongoing pressure on the euro against the Israeli shekel, which may continue to respond to macroeconomic factors and geopolitical influences.
The euro has recently shown resilience despite disappointing economic sentiment from Germany, supported by expectations that the European Central Bank (ECB) may pause interest rate cuts. However, if Germany experiences further cooling in factory gate inflation, it could indicate a wider economic slowdown across the Eurozone. Such developments could affect the ECB's monetary policy stance, subsequently influencing the euro’s value.
Analysts have noted that the ECB is likely to adopt a more dovish outlook following a rate hike to 4.0% in 2024. Market sentiment anticipates potential rate cuts to 3.5% by late 2025, which would narrow the interest rate differential with other major central banks like the U.S. Federal Reserve. Additionally, factors such as Bulgaria's upcoming accession to the eurozone and continued geopolitical tensions, notably from the ongoing war in Ukraine, create uncertainty that could further impact the euro’s performance.
On the other hand, the Israeli shekel has been strengthening, fueled by a cooling inflation rate that saw a decline to 2.5% in September, making it likely for the Bank of Israel to consider interest rate cuts. This strengthening trend, along with a recent ceasefire in Gaza that has reduced geopolitical risks, has contributed to a bullish sentiment for the shekel, which appreciated approximately 9.3% against the U.S. dollar recently.
Importantly, the movements in oil prices could also impact these currencies. Oil is currently trading at around $62.71, which is 4.6% below its three-month average, indicating volatility in the energy markets. Given that oil prices can influence inflation and economic performance, any significant fluctuations in this commodity could trigger responses in both the euro and the ILS.
In summary, the future trajectory of the EUR to ILS exchange rate may hinge on varying pressures from both European and Israeli economic developments, monetary policies, and potential geopolitical shifts. As dynamics evolve, investors and stakeholders should remain vigilant in monitoring these influences to navigate potential fluctuations in their international transactions.
