Recent analysis indicates that the USD to ILS exchange rate is under pressure as various factors affect both currencies. Currently, the USD is experiencing a slight decline. Analysts observe that the rally of the US dollar has lost momentum due to a broader market correction, exacerbated by concerns regarding a potential US government shutdown and a reassessment of Federal Reserve interest rate expectations. In the absence of impactful US data releases, it is likely that the USD will continue to fluctuate in response to general market trends.
Key developments influencing the USD include ongoing considerations about the Federal Reserve's leadership transition and the impending CPI report, which is expected to show a modest rise in core inflation. These factors could potentially sway future interest rate decisions. Furthermore, the looming deadline for US-China trade negotiations adds another layer of uncertainty for the dollar.
On the other side, the Israeli shekel (ILS) has shown notable strength. Recently reported figures highlight a decline in Israel’s annual inflation rate to 2.5%, which is within the government’s target range. This decrease raises the possibility of interest rate cuts by the Bank of Israel, which could further support the shekel. Analysts note that the shekel has strengthened approximately 9.3% against the US dollar in the second quarter of 2025, driven by favorable economic sentiment and reduced geopolitical risks.
UBS has also revised its forecasts for the USD/ILS exchange rate downward, indicating that the shekel may appreciate further due to improvements in Israel's economic fundamentals and diminishing geopolitical tensions. Recent data shows the USD to ILS trading at 3.2620, which is 1.9% below its three-month average of 3.326, suggesting a stable trading range marked by a low volatility band.
As these dynamics unfold, many experts in the market anticipate continued fluctuations in the USD/ILS exchange rate, influenced by both domestic economic indicators and international developments. Keeping abreast of these factors will be essential for individuals and businesses engaging in international transactions.
