USD/ILS: Israeli shekel forms a rare pattern amid protests
- The USD/ILS pair has formed a double-top pattern on the 4H chart.
- Israel has continued seeing some of the biggest protest in years.
- The Israeli shekel could still resume its climb soon.
Follow Invezz on Telegram, Twitter, and Google News for instant updates >
The Israeli shekel remained in a consolidation phase on Monday even as the political turmoil in the country continued. The USD/ILS exchange rate was trading at 3.60, which was ~3.20% below the highest point this year. Similarly, the EUR/ILS and GBP/ILS have also pulled back to 3.86 and 4.40, respectively.
Israel protests continues
The main catalyst for the USD to ILS exchange rate was the ongoing large-scale protests in Israel. Most of these protests were organized by the country’s largest trade union, which is protesting the ongoing overhaul of the judiciary by Benjamin Netanyahu.
The biggest news last week was the decision by the prime minister to fire the defense minister after he criticized the overhaul. In a statement on Monday, the country’s president, Isaac Herzog, said that the government should halt the overhaul. He said that the government should halt the process for the sake of the nation.
The impact of these protests will be dire for the economy considering that most sectors, including the military and the education are in disarray. Most universities have shut their doors until further notice.
Therefore, analysts believe that Netanyahu, under pressure from Washington, will pause the overhaul in he coming days.
The key concern is that Israel’s economy is not doing well even after being the fastest-growing country in 2023. Analysts expect that the economy will expand by 5.2% in 2023 followed by a slowdown in 3.5% in 2024. These protests could therefore hurt economic growth. In a recent note Moody’s wrote that:
“Stronger fiscal and debt metrics may not be sufficient to offset weakening institutions if the content of the judicial reforms and the way they are passed point to such weakening.”
The USD to ILS exchange rate rose slightly on Monday and then quickly retreated after signs that Netanyahu will pause the judiciary overhaul. The pair dropped and retested the key support level at 3.55, the lowest point on March 13. It crossed the key 25-period and 50-period moving averages. A closer look shows that the pair has formed a double-top pattern at 3.6900.
Therefore, despite the protests, there is a likelihood that the forex pair will soon have a bearish breakout as sellers target the 61.8% Fibonacci Retracement level at 3.4800.
Looking to capitalise on rising & falling USD, GBP, EUR rates? Trade forex in minutes with our top-rated broker, eToro.
77% of retail CFD accounts lose money.