EUR/ILS Outlook: The euro to Israeli shekel exchange rate is likely to decrease, currently trading below its recent average and near recent lows, pressured by economic conditions in the Eurozone and policy changes in Israel.
Key drivers:
• Rate gap: The European Central Bank maintains its approach amid moderating growth expectations, while the Bank of Israel recently cut interest rates, boosting the shekel's appeal.
• Risk/commodities: Oil prices have surged to near highs, increasing inflationary concerns for the Eurozone, which could weigh on the euro.
• One macro factor: The forecasted GDP growth of over 5% for Israel in 2026 suggests strong recovery, further supporting the shekel's strength.
Range: The EUR/ILS is likely to drift within its recent range, with limited volatility due to current conditions.
What could change it:
• Upside risk: A surprising recovery in the Eurozone’s GDP could boost the euro’s attractiveness.
• Downside risk: Further interest rate cuts in Israel might strengthen the shekel further against the euro.
