USD/ILS to stick to a short-term target range of 3.20-3.30 – Credit Suisse
|USD/ILS fell quite aggressively on Monday, February 8 from the 3.29 area to around 3.25. It has subsequently stabilized at around 3.24. Strategists at Credit Suisse maintain a target range of 3.20-3.30. Based on a risk/reward analysis, it is more attractive to buy the pair near the low end of the target range than to sell it near the top end of the range. This is due to the central bank’s FX market intervention.
Key quotes
“We stick to a short-term USD/ILS target of 3.20-3.30. The low-end of our target range reflects our view that the central bank is likely to intervene aggressively in the FX market whenever USD/ILS dips close to or below this level. A decline below 3.20 would be perceived by the central bank as a ‘real threat’ to its successful upward push on USD/ILS in January.”
“FX market intervention alone will not take USD/ILS much above 3.30, because the balance of payments dynamics remain shekel-supportive.”
“Trading-wise, based on a risk/reward analysis it is more attractive to buy USD/ILS close to the bottom of our target range than to sell USD/ILS close to the top of the range. While the central bank provides support for USD/ILS on the downside, the pair remains exposed on the upside due to the risk of a shift in global risk sentiment.”
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