Muted trading for US Dollar vs Israeli Shekel as ₪2.8476 support draws focus

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US Dollar vs Israeli Shekel drops 0.53% today

Highlights

Bank of Israel cut its policy rate to 3.75%, increasing shekel liquidity in response to recent currency strength.
Annual inflation is at 1.9%, well within target, supporting the case for continued monetary easing as strong shekel pressures exports.
USD/ILS remains under heavy downward momentum, with technicals signaling low probability of near-term rebound and likely consolidation between ₪2.8476 and ₪2.8651.

Rate cut boosts shekel liquidity as central bank targets strong currency

The Bank of Israel lowered its benchmark interest rate to 3.75%, a move that increases shekel liquidity and reflects a policy response to recent currency appreciation. Annual inflation for April was reported at 1.9%, reinforcing the central bank's case for monetary easing as inflation remains within the target range. Policymakers also noted that the strong shekel is making imports cheaper and reducing credit costs, but has begun to negatively impact the export sector's competitiveness and profitability, though price action has remained under broader selling pressure.

Downtrend persists as price stays below major technical levels

SMA-20, SMA-50, and SMA-200 are located at ₪2.9121, ₪2.9875, and ₪3.1228, respectively, with the current price below all three levels. The Ichimoku Kijun on the daily chart stands at ₪2.9406, marking the closest overhead resistance. MACD indicates strong downward momentum, while ADX values above 24 on the daily and 31 on the weekly chart reinforce the persistence of the current trend. RSI, CCI, and Stoch RSI all register in oversold territory, and BBP remains negative, confirming ongoing seller dominance. The Awesome Oscillator (AO) also supports the strongly negative bias.

Sideways action likely barring resistance break or further drop

Over the next five trading days, USD/ILS is likely to fluctuate within a volatility band ranging from ₪2.8476 to ₪2.8651, with a low probability of a sustained price rebound. The baseline scenario anticipates continued sideways movement near current values. A breakout above the immediate resistance at the Ichimoku Kijun (₪2.9406) would be required to trigger a bullish case, while a close below ₪2.8476 could set the stage for further declines.

Anton Kharitonov, expert at Traders Union, sees ongoing USD/ILS weakness reinforced by both technical and fundamental developments. The Bank of Israel’s rate cut aims to address rapid shekel appreciation, but technicals show price action well below all key averages, with indicators confirming solid seller momentum. He is cautious given oversold readings and a lack of bullish triggers nearby. "Until USD/ILS can reclaim at least the ₪2.9406 resistance, the downside bias remains intact and I remain defensive."

Earlier, analysts noted that persistent shekel strength and ongoing bearish momentum had significantly limited any recovery prospects for USD/ILS. Fresh technical confirmation of oversold conditions in conjunction with steady Bank of Israel policy support now raises the risk of a potential downside break, making moves below the ₪2.8476 threshold a key level to monitor for renewed selling pressure.

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.