Israeli new sheqel (ILS) Market Update
The USD to ILS exchange rate has recently displayed significant volatility, with the USD reaching 14-day highs near 3.5985. This is just 0.6% below its three-month average of 3.6211, reflecting a notable trading range over the past period, oscillating between 3.4842 and 3.8188.
Recent analysis suggests that the U.S. dollar has encountered downward pressures due to fears surrounding tariff policies and soft economic indicators that have triggered speculation about potential interest rate cuts by the Federal Reserve. The combination of an unexpected rise in jobless claims and lower factory-gate inflation data has raised concerns regarding the health of the U.S. economy, leading to forecasts suggesting further weakness in the USD. Analysts highlight that if the expected improvement in consumer sentiment materializes, it could provide some support to the dollar.
Meanwhile, the Israeli shekel has been influenced by local geopolitical tensions, particularly following the attack by Hamas militants and Israel's subsequent military response. The shekel recently fell to its lowest level against the USD in nearly eight years, exacerbated by the ongoing conflict and the Bank of Israel's intervention through foreign exchange sales. Experts note that the overlapping impact of U.S. tariffs—specifically the 17% reciprocal tariff rate imposed on Israeli goods—adds another layer of complexity to the shekel's stability in the forex market.
Going forward, currency specialists suggest that movements in the USD to ILS exchange rate will largely depend on the economic landscape in both the U.S. and Israel, including developments in geopolitical dynamics and central bank policies. The trajectory of the USD will hinge on the decisions made by the Federal Reserve, alongside key economic data releases, while the ILS will be closely monitored as geopolitical factors continue to evolve. As both currencies navigate these challenges, market participants should remain vigilant to shifts in sentiment that could influence exchange rate dynamics in the near term.
