EUR/ILS Outlook:
Likely to decrease, as the rate is below its recent average and faces pressure from domestic economic policies.
Key drivers:
• Rate gap: The European Central Bank is maintaining interest rates, while the Bank of Israel has recently cut rates, favoring the shekel over the euro.
• Risk/commodities: The rising oil prices could impact inflation and economic stability in the Eurozone, causing further pressure on the euro.
• One macro factor: Eurozone inflation has fallen below the ECB's target, raising concerns regarding potential rate cuts in the near future.
Range:
The EUR/ILS likely will drift within the recent range, influenced by domestic economic trends.
What could change it:
• Upside risk: A stronger-than-expected recovery in Eurozone economic data could support the euro.
• Downside risk: Continued rate cuts by the Bank of Israel could reinforce the shekel's strength against the euro.