Bias: Bearish-to-range-bound, as the USD is currently below the 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: The Federal Reserve is expected to cut interest rates, which could weaken the US dollar compared to the Bank of Israel’s recent interest rate cut, boosting the shekel.
- Risk/commodities: The shekel has strengthened against the dollar while the oil market remains volatile, influencing overall risk appetite and currency positions.
- Geopolitical tensions: Recent U.S. airstrikes in Venezuela may affect global risk perception, impacting the dollar and its demand in the currency market.
Range: The USD/ILS is likely to drift within the current range, as it has remained fairly stable but could face resistance at lower levels.
What could change it:
- Upside risk: If the Federal Reserve adopts a more hawkish tone, the dollar could strengthen.
- Downside risk: Continued strengthening of the shekel due to further positive economic data from Israel could push the USD/ILS lower.
