The USD to ILS exchange rate has a bearish outlook. Key drivers include the ongoing adjustments in U.S. Federal Reserve policy with anticipated interest rate cuts, which are expected to weaken the dollar. The dollar's strength is also being challenged by improving global growth and rising commodity prices that support alternative currencies. Meanwhile, the ILS benefits from strong economic indicators in Israel, including projected GDP growth and reduced geopolitical risks, which have bolstered confidence in the shekel.
In the near term, the USD/ILS rate is expected to trade lower, likely within a stable range as the shekel continues to perform strongly against the dollar.
Upside risks to this outlook include unexpected strength in the U.S. job market that may lead to a shift in Fed policy. Conversely, a resurgence of geopolitical tensions affecting Israel could negatively impact the ILS, leading to potential weakening against the dollar.
