The market bias for the USD to ILS exchange rate is bearish.
Key drivers include the anticipated interest rate cuts by the Federal Reserve, which could weaken the USD as they plan three rate reductions by mid-2026. Improvements in global economic growth coupled with rising commodity prices may heighten volatility, affecting dollar performance. Additionally, the Israeli economy is projected to grow at 4.7%, bolstering investor confidence in the shekel.
In the near term, the USD to ILS is expected to trade within a range influenced by the recent appreciation of the shekel and reduced geopolitical risk premiums. Current levels indicate a rate close to 3.1869, approximately 1.9% below the three-month average.
An upside risk could arise if the global economic outlook improves faster than expected, strengthening the USD. Conversely, a downside risk includes the potential for the Bank of Israel to adopt more aggressive monetary policy, further supporting the ILS against the USD.
