USD/ILS Outlook:
The USD/ILS pair is likely to decrease as it is currently trading well below its recent average and is near recent lows. The Bank of Israel's recent interest rate cut and improved investor confidence in the shekel contribute to this outlook.
Key drivers:
- Rate gap: The Federal Reserve maintains higher interest rates compared to the recent cut by the Bank of Israel, putting pressure on the USD.
- Risk/commodities: Oil prices are trending lower, which generally strengthens the shekel against the dollar, as demand for cheaper imports increases.
- One macro factor: The recent strengthening of the shekel reflects improved investor confidence due to diminished geopolitical risks in the region.
Range:
Expect the USD/ILS to drift within the established ranges, potentially testing the lower extremes of the recent movement.
What could change it:
- Upside risk: A surprising increase in US economic data could strengthen the dollar.
- Downside risk: Continued strength in the shekel, driven by economic stability and confidence in Israel, could pressure the USD further.
