US Dollar vs Israeli Shekel holds steady as Bank of Israel rate cut to 3.75%

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US Dollar vs Shekel drops 0.58% today

Highlights

The Bank of Israel cut its benchmark rate to 3.75%, narrowing rate differentials and making the shekel relatively more attractive.
April inflation remained subdued at 1.9%, within target and supporting the central bank's decision to maintain an accommodative policy stance.
USD/ILS trades persistently below key technical levels, with momentum indicators signaling further downside and a likely range of ₪2.8100–₪2.8350.

Rate cut and shifting speculative bets fuel shekel's relative appeal

The Bank of Israel cut its benchmark interest rate by 0.25 percentage points to 3.75%, a move that reduces local currency yields and narrows the rate differential, making the shekel more attractive in relative terms. April inflation figures of 1.9% kept price growth within the government's target and supported the central bank's decision to maintain an accommodative stance. In parallel, the latest positioning data showed that speculative US dollar bets have shifted net short for the first time since early March, reflecting waning safe-haven demand and contributing to selling momentum in the pair.

Support breaks and persistent selling as indicators confirm bias

Technically, USD/ILS is trading well below the SMA-20 (₪2.9070), SMA-50 (₪2.9816), and SMA-200 (₪3.1208), with the Ichimoku Kijun (D1) at ₪2.9246 offering near-term resistance. The price is situated near the bottom of today's range (₪2.8300–₪2.8422), pointing to persistent downward pressure after the open. Momentum readings confirm the bias, as MACD and ADX both indicate active selling, while RSI, CCI, and Stoch RSI are all in oversold zones. BBP remains negative intraday, and the Awesome Oscillator supports this selling momentum outlook.

Further declines favored as weak momentum persists in volatility band

In the short term, USD/ILS is expected to drift sideways to lower within a typical volatility band of ₪2.8100 to ₪2.8350. The probability of further downside exceeds 80%, as weekly trend indicators continue to signal a lack of bullish momentum. Should the pair push above ₪2.9250, this would mark a momentum reversal scenario, while a close below ₪2.8100 could open up new lows if selling activity accelerates.

Anton Kharitonov, analyst at Traders Union, believes USD/ILS remains pressured by weak technicals and a dovish policy shift from the Bank of Israel. He sees sentiment turning negative as speculative positioning moves net short and oversold readings persist. Downside momentum is dominant and rallies should be approached with skepticism. "Until ₪2.9250 is reclaimed, there is no convincing case for a reversal in USD/ILS."

Earlier, analysts noted that persistent shekel strength and bearish momentum were limiting recovery prospects for USD/ILS. The current combination of continued downside technical signals and shifting speculative positioning reinforces the prevailing bearish outlook, with a close below ₪2.8100 emerging as the next critical downside risk for traders to monitor.

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

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