The recent volatility in the USD to ILS exchange rate is influenced by a mixture of U.S. economic indicators and geopolitical dynamics affecting Israel. Analysts note that the U.S. dollar has experienced fluctuations due to ongoing uncertainties in U.S.-China trade relations and speculation surrounding Federal Reserve interest rate policies. Recent remarks by President Trump, reducing tariff threats, have added to the unpredictability. Federal Reserve Chair Jerome Powell's forthcoming speech could signal a shift in monetary policy, further impacting the dollar's strength. A hawkish stance could bolster the USD and potentially shift its trajectory against the shekel.
In tandem, the Israeli new shekel has shown notable resilience. It appreciated significantly against the USD, rising approximately 9.3% in the second quarter of 2025. This strengthening is partly attributed to improved investor sentiment post-Operation Rising Lion, along with ongoing efforts by the Bank of Israel to transition to a new risk-free overnight interest rate system, which could enhance long-term market stability. UBS has revised its forecasts, predicting continued strength in the shekel due to reduced geopolitical risk premiums and positive economic fundamentals in Israel.
The current exchange rate for USD to ILS is near 3.2892, marking a 7-day high and reflecting a range that is about 1.9% lower than its 3-month average of 3.353. The stability in the exchange rate, maintained within a 6% range, suggests caution among market participants amid external economic pressures and potential conflicts.
Overall, currency forecasters emphasize that while the short-term outlook may pivot based on U.S. economic releases and geopolitical developments, the shekel's strength appears to be solidified by domestic economic conditions, positioning it favorably against the USD in the coming months.
