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The Israeli Shekel has lost some value to the USD in the past couple of days, this as the currency pair jumped higher after the Bank of Israel decreased its interest rate by a quarter of a point. The 0.25% cut to the Israeli interest rate did cause the USD/ILS to move upwards and the current rate is near 3.02950. A wide spread for the USD/ILS is also being seen this morning.
But before day traders latch onto the idea of a higher USD/ILS only because of the Bank of Israel interest rate cut, there is also a consideration that renewed fighting between Iran and U.S may be sparking some nervous sentiment in financial institutions. Having mentioned the interest rate cut and escalation of military conflict in the Middle East, it should be noted the jump higher in the USD/ILS has been rather polite.
The 3.00000 Level as Support is Now in Fashion
After the Bank of Israel interest rate cut there was criticism once again that the decrease was not aggressive enough. The high for the USD/ILS hit around 3.05765 yesterday, the low before the announced interest rate on the 6th of June was a spike lower in the day when the 2.97800 vicinity was briefly challenged.
The USD/ILS still remains in a stronger bearish realm taking into historical price averages for the currency pair. The ability of the USD/ILS to remain fairly close to the 3.00000 which now feels like a psychological support level remains a fixture. Day traders may decide to use price action that incrementally moves lower to ignite buying wagers in the USD/ILS. However, the question is how high can the USD/ILS currently move under its current conditions?
Renewed Fighting Between Iran and Israel?
For the moment Iran has not launched rockets towards Israel. Finanancial institutions and the Israeli government seem to be rather calm about the potential threat of increased fighting between Iran and Israel for the moment, with most brushing it aside and saying it is unlikely to happen. However, if military action were to escalate further between the the U.S and Iran in the coming days, then it is hard to predict what could develop next.
Reports suggest that Iran is already launching unprovoked attacks against neighoring countries in the Persian Gulf.
The USD/ILS is typically not heavily traded on Friday due to the absense of most Israeli financial institutions, but speculators may want to venture some precuationary long positions before the weekend just in cast another outbreak of fighting happens between Iran and Israel.
When the military engagement between Iran and Israel took place in recent months, the highs of the USD/ILS consistently traded above the 3.10000 ratio.
However, betting for this to happen is simply a ‘what if’ wager and may not happen.
Thus looking for slight movements higher that aim for nearby targets and resistance may be best.
USD/ILS Short Term Outlook:
Current Resistance: 3.03500
Current Support: 3.02200
High Target: 3.06100
Low Target: 3.01700