Israeli Shekel at multi-year highs, central bank ready to intervene

The USDILS remains elevated and holding near multi-year high (3.9580) posted after strong upside acceleration in past couple of sessions.

Shekel fell sharply on Monday (the biggest one-day loss in 3.5 years) after the situation escalated during the weekend and remains under increased pressure as violent clashes continue and threatening of escalation which keeps the market highly volatile.

The Israeli currency has been in downward trajectory since late 2021 and was down around 9% in Jan/Sep period in 2023, with the latest deterioration pushing the Shekel down almost 2% against the US dollar.

The Bank of Israel announced it is ready to intervene by selling up to $30 billion of foreign currency in the open market, in the first ever such transaction, to restore and maintain stability during the war period.

Israeli officials also want to decrease uncertainty before local markets reopen and ensure regular activity in the market.

Daily studies remain firmly bullish but overbought, which may slow the pace of recent rally, however the action will be primarily driven by fundamentals and further deepening of the crisis will likely put Shekel under fresh pressure.

Bulls already cracked initial target at 3.95 and eye psychological 4.00 barrier, with dips to be contained above rising 10DMA (3.8841) to keep larger bulls intact.

Conversely, loss of 10DMA handle and filling Monday’s gap would signal that bulls are running of steam.

Res: 3.9580; 3.9640; 3.9829; 4.0000
Sup: 3.9395; 3.9276; 3.9000; 3.8841