Amidst ongoing turbulence in the foreign exchange market, the shekel has shown resilience after a recent downturn, bouncing back against the dollar. On Tuesday, the dollar saw a 0.9% decrease compared to its representative rate, trading at 3.70 shekels. This follows a 1% surge just the previous day, settling at 3.732 shekels. Similarly, the euro weakened marginally by 0.2%, hovering around NIS 4.02.

Market analysts are closely monitoring upcoming events that could influence shekel’s movements. Locally, attention is directed towards the Bank of Israel’s forthcoming interest rate decision scheduled for Monday. Meanwhile, in the global arena, anticipation surrounds the release of the employment report from the United States, due tomorrow.

Federal Reserve Chairman Jerome Powell delivered a speech on Wednesday, reiterating the central bank’s cautious stance on future monetary policy. Powell emphasized the need for further data before considering any interest rate adjustments. “We don’t think it would be right to lower interest rates until we are more confident that inflation is coming down to 2% and over time,” Powell stated during his address at Stanford University.

However, Powell also hinted at the possibility of future rate cuts, acknowledging the recent strong economic indicators. He noted, “The latest readings, both of employment and of inflation, were higher than the forecasts. But these data do not fundamentally change the big picture, of solid growth in the economy, a strong employment market that is also beginning to balance, and inflation moving downwards, towards 2%, although there are some upheavals along the way.”

The Federal Reserve raised the rate 11 times between March 2022 and July 2023 to address the issue of price increases. However, at the end of 2023, the Federal Open Market Committee (FOMC) predicted making three quarter-point cuts by the end of 2024. According to CNBC, this may start as early as the next meeting on May 1, contingent upon the data trajectory, which includes the March employment report and inflation data.

The Federal Reserve’s following meetings, scheduled for June 12, and July 31, are poised to be pivotal moments as policymakers navigate the evolving economic landscape, which is also expected to have an impact on Bank of Israel decisions.