The USD to ILS exchange rate has recently shown downward pressure, with the rate currently sitting at near 3.2559, reflecting a 1.2% decline from its three-month average of 3.2962. Analysts note that the exchange rate has remained stable within a 5.9% range, from 3.2003 to 3.3891. This decline in the USD valuation appears to be influenced by a combination of factors affecting both currencies.
For the US dollar, recent risk-positive market sentiment has diminished its appeal as a safe-haven currency. Analysts observed that the USD fluctuated after an initial drop, aided by drops in jobless claims, yet continued risk appetite has capped its recovery. Important upcoming economic indicators, including the U.S. Consumer Price Index (CPI) and developments in U.S.-China trade negotiations, could influence future movements. Moreover, ongoing discussions regarding a potential leadership transition at the Federal Reserve also contribute to uncertainties surrounding U.S. monetary policy.
In contrast, the Israeli New Shekel has shown signs of strength, aided by a recent decline in inflation, now at 2.5%—the lowest in several months. This dip aligns with government targets and raises the possibility of interest rate cuts by the Bank of Israel. The shekel has appreciated by approximately 9.3% against the dollar recently, bolstered by improved investor sentiment and a markdown in geopolitical risk premiums due to a ceasefire in Gaza.
Economists from UBS have adjusted their projections for the USD/ILS exchange rate downward, anticipating further strengthening of the shekel in light of favorable economic fundamentals and diminishing risk factors in the region. These dynamics appear to set the stage for continued volatility in the USD to ILS exchange rate moving forward, driven by both local and international developments.
