The USD to ILS exchange rate has been influenced by various recent developments and forecasts indicating a potential decline of the US dollar against the Israeli shekel. Analysts observe that the USD is currently facing downward pressure, mainly due to dovish sentiment surrounding the Federal Reserve's upcoming interest rate decisions. A rate cut, likely by 25 basis points, is anticipated, with some speculation of a possible 50 basis point cut, potentially further eroding support for the dollar.
Recent data releases, including retail sales figures, may reinforce this bearish outlook for the USD. Analysts point out that slowing sales growth is expected, which could intensify Fed rate cut expectations, thereby contributing to a decline in USD value. Additionally, broader geopolitical concerns, such as the shifting dynamics of US-China trade relations and global trends toward dedollarization, are adding complexity to the dollar’s long-term prospects.
On the other hand, the Israeli shekel (ILS) has demonstrated strength against the USD, attributed to a decline in geopolitical risks and solid domestic economic fundamentals. Recent forecasts from UBS project that the USD/ILS exchange rate will reach around 3.30 by the end of the current quarter and remain stable into the next quarter before potentially decreasing to 3.20 by mid-2026. This outlook reflects Israel's robust foreign investment surge, amounting to approximately $8.5 billion in capital markets since the start of 2025, the highest since early 2021.
In current trading, the USD to ILS rate is at 3.3505, registering a 7-day high, and remains relatively stable, lying just below its 3-month average of 3.378. This range, between 3.3170 and 3.5127, highlights a less volatile environment for investors, yet suggests that shifts in external and internal economic conditions could trigger significant movement in the exchange rate.
In conclusion, the interplay between the Fed's monetary policy, US economic data, and factors affecting the ILS paints a complex but revealing picture of the currency market, leading many experts to suggest a cautious outlook for the dollar against the shekel in the near term.
