USD/ILS Outlook:
Bearish, as the rate is below its recent average and near recent lows due to geopolitical tensions and a stronger shekel.
Key drivers:
• Rate gap: The Federal Reserve has kept interest rates steady, while the Bank of Israel recently cut rates, favoring the shekel.
• Risk/commodities: The overall trend of the U.S. dollar is being pressured as investors reduce exposure, influenced by geopolitical tensions and a declining market for U.S. assets.
• One macro factor: The Bank of Israel’s surprise interest rate cut is aimed at supporting economic stability, contributing to the shekel’s strength.
Range:
Expect USD/ILS to drift within its recent range, likely remaining anchored near recent lows.
What could change it:
• Upside risk: A stronger-than-expected U.S. jobless claims report could bolster the dollar.
• Downside risk: Further geopolitical tensions or additional interest rate cuts from the Bank of Israel may weaken the dollar against the shekel.
