Bank of America Sees the Dollar Rebounding Against the Shekel

Bank of America says the dollar may soon strengthen again against the shekel, as foreign exchange markets remain highly volatile amid global security and economic upheaval. According to a report in Globes, the bank sent clients a memo saying it has opened long positions on the dollar against both the shekel and the Hungarian forint, in equal weighting, targeting a move of about 5%.

The call comes after the shekel had surged sharply against the dollar to unusually strong levels of around 2.8 shekels per dollar. The dollar later recovered and is now trading near 2.98 shekels. Bank of America says its forecast is tied in part to the Federal Reserve's hawkish policy, arguing that high U.S. interest rates continue to pressure emerging-market currencies, including the shekel.

The memo adds that prolonged tight monetary policy in the United States is likely to increase pressure on global markets and amplify volatility in the foreign exchange market. In Israel, traders are also watching Bank of Israel rate decisions. Although rate cuts were expected to slow the shekel's rise, the dollar kept falling after the decision and briefly hit an unusual low before turning higher again.

Market participants have attributed the shekel's recent strength to a mix of capital flows, interest-rate expectations, a changing security situation and foreign investor activity. Bank of America now suggests that direction may be shifting, with the dollar potentially moving back to higher levels against the shekel in the near term.