The USD to ILS exchange rate has exhibited notable movements recently, influenced by a mix of developments in both the US and Israeli markets. Analysts highlight that the US dollar has seen an uptick following the Federal Reserve's recent policy announcements, with expectations shifting regarding future interest rate cuts. However, a disappointing ISM manufacturing PMI report exerted downward pressure on the greenback, indicating potential weaknesses in the US manufacturing sector.
Market dynamics affecting the USD include discussions around a leadership change at the Federal Reserve, which could impact monetary policy direction. Upcoming inflation data, particularly the Consumer Price Index report, is also anticipated as a major factor that may influence the Fed's next decisions. Concurrently, US-China trade tensions remain a constant backdrop, as any developments could sway the dollar's strength.
On the Israeli side, the shekel has demonstrated considerable resilience, appreciating around 9.3% against the dollar in the second quarter of 2025. This strengthening is attributed to a decline in inflation to 2.5% in September 2025, now within the government's target range, which has sparked discussions about potential interest rate cuts by the Bank of Israel. Additionally, easing geopolitical tensions have improved investor sentiment toward Israel, further supportive of the shekel's value.
Market experts emphasize the revised forecasts from UBS, which have predicted a continued strengthening of the shekel, attributing this to decreased geopolitical risk and improved economic fundamentals in Israel. The USD/ILS exchange rate currently sits near 3.2689, indicating a 1.9% decrease from its three-month average of 3.3318. The rate has been relatively stable, oscillating between 3.2512 and 3.4578, demonstrating a predictable range despite ongoing global pressures.
As a result, traders and businesses should monitor these economic indicators closely, as shifts in monetary policy by either the Federal Reserve or the Bank of Israel could impact the USD/ILS exchange rates substantially in the near future.
