Bias: Bearish-to-range-bound, as USD/ILS trades below the 90-day average and sits in the lower half of the 3-month range, with only modest upside potential.
Key drivers:
- Rate gap: Fed is expected to ease toward neutral in 2026, while the Bank of Israel has already cut and remains supported by a stronger economy, keeping the ILS relatively firm.
- Macro factor: US payrolls and unemployment data ahead will shape Fed easing bets and the dollar, with markets watching for any shift toward faster easing.
Range: The pair is likely to drift within the 3-month range, holding toward the lower end with occasional tests toward the middle, especially as data flows come in this week.
What could change it:
- Upside risk: A stronger US payrolls report or a hawkish Fed tone could lift the dollar and push USD/ILS higher.
- Downside risk: Softer US data or a clearer path to faster Fed easing could weigh on the dollar and push USD/ILS lower.
