The current market bias for the EUR to ILS exchange rate is bearish.
Key drivers include:
• The interest rate differential between the European Central Bank's (ECB) stable rates and Israel's strong economic growth supports the shekel's strength.
• Geopolitical events, particularly the recent ceasefire in Gaza, have improved investor confidence in the ILS, contributing to its appreciation.
• Positive growth forecasts for Israel, with an anticipated GDP increase of 4.7% for 2026, underpin the shekel’s strength against the euro.
In the near term, expect the EUR to ILS exchange rate to trade within a stable range, considering its recent pattern around 3.7439, notably below its three-month average.
An upside risk could come from a significant monetary policy shift by the ECB, while a downside risk is a resurgence in geopolitical tension in the region, which could increase volatility and weaken the euro further.