The USD to ILS exchange rate forecast reflects a complex interplay between various economic factors from both the U.S. and Israel. Recently, the U.S. dollar has shown signs of weakness, attributed to a market correction and re-evaluated expectations regarding Federal Reserve interest rates. Analysts note concerns over potential overshooting in Fed policy, compounded by the looming threat of a government shutdown, which could further undermine dollar strength. Market movement is expected to be driven largely by broader market trends in the absence of significant U.S. economic data.
In contrast, the Israeli new shekel has shown considerable resilience. The shekel appreciated approximately 9.3% against the dollar in the second quarter of 2025, buoyed by improving investor sentiment and factors such as the recent decline in Israel’s inflation rate to 2.5%. This decline may prompt the Bank of Israel to consider interest rate cuts, enhancing the shekel's attractiveness. UBS has revised its USD/ILS exchange rate forecasts downward, indicating a potential for continued strengthening of the shekel due to reduced geopolitical risks and solid economic fundamentals.
Currently, the USD to ILS rate stands at about 3.2726, which is approximately 1.7% below its three-month average of 3.328. This recent level marks a 7-day high, with trading having remained relatively stable within a 5.6% range. As geopolitical stability improves and economic indicators show a favorable trajectory for the shekel, market experts foresee a sustained strengthening of the shekel against the dollar. Consequently, businesses and individuals engaging in international transactions may benefit from closely monitoring these developments to optimize currency conversion costs.
