The USD to ILS exchange rate shows a bearish market bias.
Key drivers include the expected decline in the USD due to potential Federal Reserve rate cuts through mid-2026, while the ILS strengthens from improved investor confidence and robust GDP growth projections for Israel. Additionally, a significant reduction in geopolitical risk has bolstered the shekel's appeal.
In the near term, the USD/ILS rate is anticipated to trade within a narrow range, reflecting recent stability and lower volatility.
An upside risk to the USD could emerge if U.S. economic data significantly outperforms expectations, prompting a revision in interest rate outlooks. Conversely, further strengthening of the ILS could occur if geopolitical tensions remain subdued while economic indicators in Israel continue to improve, pushing the USD lower.
