Can Bank of Israel policy support USD/ILS?

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US Dollar vs Israeli Shekel drops 0.59%

Highlights

The Bank of Israel has kept its policy rate unchanged at 3.25%, maintaining the interest rate spread versus the US dollar.
Holding rates steady continues to influence demand for the shekel among international investors, shaping currency flows.
USD/ILS faces near-term bearish momentum with price expected to range between ₪3.0476 to ₪3.0797 and a high likelihood of further declines.

Steady rate policy sustains shekel demand amid neutral monetary stance

The Bank of Israel has maintained its policy rate at 3.25%, a decision that keeps the interest rate differential with the US dollar steady and shapes the monetary backdrop for currency flows, according to Israelinvestmentreport Substack. By holding steady on rates, the central bank signals a commitment to its current policy stance, which continues to influence demand for the Israeli shekel among international investors. This monetary context forms the foundation for recent trading activity in the US Dollar vs Israeli Shekel.

Mixed technical signals as downside momentum meets conflicting indicators

On the technical side, USD/ILS is situated below the MA-20 at ₪3.0788 and MA-50 at ₪3.0952 on the hourly chart, while remaining above the MA-200 on the daily timeframe at ₪3.0136. The immediate resistance is set at the Ichimoku Kijun level of ₪3.0937. MACD indicates strong sell momentum, with ADX in neutral territory, pointing to moderate trend strength. RSI stands at 45.47, favoring a sell bias, while Stochastic RSI reflects overbought conditions. CCI is neutral, showing a divergence among oscillators, while Bull/Bear Power signals buy, suggesting some intraday demand. The Awesome Oscillator remains neutral, providing no clear supporting signal.

Downside favored as breakout risks low amid tight trading range

Over the short term, USD/ILS is expected to remain within a volatility band between ₪3.0476 and ₪3.0797. The probability of an upward breakout is characterized as very low, while the likelihood of further downside is high. The baseline scenario involves range-bound trading between current support and resistance levels. Should bullish momentum unexpectedly emerge and push the price above the Ichimoku Kijun resistance, higher price levels may be challenged; conversely, a break below the lower end of the range could trigger an extension of the ongoing decline.

Viktoras Karapetjanc, Traders Union expert, sees the Bank of Israel's steady policy rate as setting a stable macro foundation for USD/ILS flows. He believes monetary conditions are supportive of the current trend, with technicals showing a mixed but mostly neutral-to-bearish picture. Range-bound trading is likely with only a low chance of an immediate breakout. Karapetjanc maintains a moderately optimistic stance on tactical opportunities. "I view the current monetary stability as a constructive backdrop — any surprise move above ₪3.0937 could open the door for further gains."

Previously it was reported that USD/ILS maintained a generally bullish structure despite emerging downside pressures, supported by resilient technical alignment above major moving averages. The current analysis indicates a shift as the pair trades below key short- and medium-term moving averages, with traders now advised to monitor for a potential downside extension should support at ₪3.0476 fail to hold.

Source of Data: USD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.