The USD to ILS exchange rate has recently experienced volatility, influenced by macroeconomic factors and geopolitical tensions. Analysts note that the US dollar is currently under significant pressure, primarily due to concerns surrounding the potential government shutdown and weak employment figures, which have dampened overall market sentiment. With no immediate clarity on upcoming non-farm payroll data, the dollar's recent performance has been affected, specifically in light of lower-than-expected employment numbers from the ADP report.
At present, the USD/ILS rate stands at 3.2803, which is approximately 2.2% below its three-month average of 3.3557. This indicates a relatively stable trading range over the past months, fluctuating between 3.2752 and 3.4578. Market analysts suggest that an expansion in the US services sector, as indicated by the ISM services PMI, could provide some support to the dollar in the short term.
Conversely, the Israeli shekel's performance is also shaped by its own set of challenges and strengths. Recent geopolitical tensions have exerted downward pressure on the shekel, particularly following military operations that rattled investor confidence. The Bank of Israel has implemented measures to stabilize the currency, including notable foreign exchange market interventions. A significant move included the central bank selling over $8 billion in foreign currency to counteract depreciation.
Moreover, the Bank of Israel's monetary policy remains cautious, with the benchmark interest rate held steady at 4.50% due to ongoing geopolitical risks and rising inflation. Although foreign exchange interventions have supported the shekel's recovery from an 11-year low, UBS analysts have recently revised their forecasts for the USD/ILS pair downward, signaling a potential strengthening of the shekel against the dollar as geopolitical risks diminish.
As developments unfold, market participants should keep an eye on geopolitical dynamics and US economic indicators, as these will remain critical in shaping the USD to ILS exchange rate outlook.
