Recent forecasts for the USD/ILS exchange rate indicate a bearish outlook for the US dollar as it faces multiple pressures. Analysts report that the dollar has begun the week weak, influenced by expectations of forthcoming interest rate cuts from the Federal Reserve. A disappointing ISM manufacturing PMI further reflects economic strains in the US, adding to the bearish sentiment surrounding the dollar.
Attention is now focused on remarks from Fed Chair Jerome Powell, which may either confirm or counter the dovish momentum shaping the currency's trajectory. If Powell signals a more hawkish stance, it could help stabilize the dollar, although the broader environment remains challenging. Market observers note the potential for further depreciation of the dollar amidst factors including an anticipated CPI report, global dedollarization trends, and ongoing trade tensions with China.
On the other hand, the Israeli new shekel (ILS) exhibits signs of resilience. Recent data reveals a decrease in Israel's inflation rate to 2.5%, spurring discussions regarding potential interest rate cuts by the Bank of Israel. The shekel has notably appreciated about 9.3% against the dollar during the second quarter of 2025, suggests that positive investor sentiment and geopolitical stability are supporting its strength. Furthermore, UBS has downgraded USD/ILS forecasts, attributing the shekel's bullish momentum to improved local economic conditions, reduced geopolitical risk, and the positive impacts of a recent ceasefire in Gaza.
Market data reflects the current dynamics, with USD/ILS trading at 3.2534—1.2% beneath its three-month average of 3.2918. The exchange rate has remained within a relatively stable range of 5.0%, oscillating between 3.2003 and 3.3615. Given these diverse influences, USD and ILS traders should remain informed of both macroeconomic indicators and geopolitical developments that could impact the exchange rate in the weeks ahead.
