Recent forecasts for the USD to ILS exchange rate indicate a complex interplay of factors currently influencing both currencies. Analysts note that the US dollar found temporary strength due to a decrease in expectations for Federal Reserve interest rate cuts, particularly as the likelihood of a December cut fell below 50%. However, these gains have been tempered by caution among investors, who are anticipating underwhelming economic data releases due to the effects of a recent US government shutdown. This atmosphere of uncertainty could limit further upward movement for the dollar.
In terms of notable influences on the USD, the potential leadership transition within the Federal Reserve is particularly pertinent. Treasury Secretary Scott Bessent highlights the importance of a new Fed chair who can adapt the Fed's role beyond traditional monetary policy, emphasizing a broader economic perspective. The upcoming Consumer Price Index (CPI) report for July, projected to show a modest rise in core prices, might also sway Fed interest rate decisions.
On the Israeli side, the shekel's recent performance has been characterized by notable appreciation against the dollar, driven by several favorable economic developments. Analysts report that Israel's annual inflation rate decreased to 2.5% in September, which is now comfortably within the government's target range. This cooling inflation could prompt the Bank of Israel to consider potential interest rate cuts, which would further strengthen the shekel. Additionally, UBS has revised its USD/ILS forecasts downward in light of improved investor sentiment and reduced geopolitical risk following a recent ceasefire in Gaza. The shekel appreciated approximately 9.3% against the dollar last quarter, highlighting the shifting dynamics in the region that are feeding into the currency market.
Current exchange rate data reflects these trends, with USD to ILS trading at 7-day highs near 3.2516. This rate is approximately 1.7% below its 3-month average of 3.3077, having maintained relative stability within a range of 6.7% from 3.2003 to 3.4143. As the markets react to these ongoing developments, traders and businesses engaged in international transactions should stay attuned to evolving economic indicators that may affect the USD/ILS exchange rate in the coming weeks.
