Recent analysis of the USD to ILS exchange rate indicates a downward trend for the US dollar amid improving risk appetite and significant economic factors at play. The dollar recently experienced a dip as safe-haven demand diminished following political developments, such as the signing of a funding bill by President Trump which ended a prolonged government shutdown. This shift towards riskier assets has limited the dollar's upward potential for the time being.
Looking ahead, several key market factors are influencing the dollar's trajectory. The Federal Reserve's leadership transition highlights the necessity for a new chair to focus on broader economic issues, which could impact monetary policy decisions. Additionally, the anticipation of upcoming inflation data is significant. Analysts expect a 0.3% rise in the core Consumer Price Index (CPI) for July, which could sway Federal Reserve interest rate policies. The ongoing U.S.-China trade negotiations are also critical, especially with a tariff deadline approaching that may influence market sentiment.
For the Israeli shekel, recent developments suggest a strengthening position against the US dollar. In September 2025, Israel’s inflation rate decreased to 2.5%, prompting speculation about potential interest rate cuts from the Bank of Israel, as it aligns with the government's inflation targets. Furthermore, the shekel has appreciated by approximately 9.3% against the dollar in the second quarter of 2025, fueled by enhanced investor sentiment and a generally weaker dollar. UBS has even revised its USD/ILS forecasts downward, highlighting reduced geopolitical risks and robust economic fundamentals in Israel.
The ceasefire in Gaza has further reduced Israel’s risk premium, contributing to a 2.0% strengthening of the shekel against the dollar in the third quarter. Currently, the USD/ILS exchange rate sits at 3.2281, approximately 2.4% below its three-month average of 3.3086, indicating a relatively stable trading range in recent weeks.
As these dynamics continue to unfold, both the US dollar and the Israeli shekel face distinct influences that could shape their movements in the near term, making it crucial for individuals and businesses engaged in international transactions to remain vigilant and informed.
