The USD/ILS touched the 1.38840 vicinity yesterday as the broad Forex market, including the Israeli Shekel, reacted with a buying surge as Fed Chairman Jerome Powell spoke during the Fed’s FOMC press conference.

The USD/ILS touched highs yesterday last seen on the 1st of July. The USD/ILS correlated well to the broad markets and is reacting in step with financial institutions worldwide that are leaning into slightly stronger USD centric positions. The lower depths of the USD/ILS can still be viewed, but the climb back above the 1.35000 level in the middle of this week highlighted that nervous buying was infiltrating the financial institutions.

The USD/ILS remains in a long-term stronger bearish cycle, and trading the last two days of this week will be intriguing. If the 3.39000 to 3.40000 level continue to prove durable as resistance this may set the USD/ILS up for some selling consideration. However, the U.S will be releasing its jobs numbers tomorrow which could effect Forex a bit. The term ‘a bit’ is used to highlight that yesterday’s stronger growth numbers from the U.S and tame inflation data did not cause USD weakness.

Federal Reserve Altering the Forex Landscape

The past few months has seen financial institutions lean into USD weakness. Many analysts believed the Fed would have to lower interest rates. Yesterday, once again, Jerome Powell made it clear he has no intention of cooperating with the White House. Even as stronger growth numbers via the GDP were seen and lower prices were also highlighted via the GDP Price Index, the Federal Reserve remained stubborn and continued to express concerns about tariff implications. The USD has become much stronger the past week as sentiment has started to shift and become murky again.

Israel and the U.S agreed to a trade pact a couple of months ago, thus the USD/ILS will not face challenges due to interpretations or worries about tariffs. The USD/ILS is correlating to the broad Forex market and the buying the past handful of days is a clear representation. The USD/ILS was near the 3.33000 vicinity at this time last week.

Short-Term vs. Mid-Term Considerations in the USD/ILS

The Israeli Shekel has been one of the strongest currencies in Forex the past year in many respects. The risk premium that was priced into the USD/ILS has disappeared and the lows the currency pair have been battling are technically interesting.

• Short-term traders may believe the USD/ILS is overbought, but as long as financial institutions remain nervous the broad Forex market may continue to effect the Israeli Shekel.
• Prices over the 3.40000 level may be considered too high by those with bearish perspectives, but short-term considerations need solid risk management to guard against surprises if they want to be sellers.

USD/ILS Short Term Outlook:

Current Resistance: 3.38400

Current Support: 3.37400

High Target: 3.41400

Low Target: 3.35800

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