Dollar edges lower in Israel as markets await Fed decision, Israel inflation data and Iran deal news

The dollar weakened slightly in the local market on Friday, while the euro also fell, as traders waited for more geopolitical updates, the U.S. Federal Reserve’s next policy decision, and Israel’s May inflation figures. The local currency market is reacting to President Donald Trump’s announcement that Washington had reached a memorandum of understanding to end the war in Iran, with a final agreement expected in the coming days.

In Israel, the dollar slipped 0.2% to about 2.93 shekels, while the euro dropped 0.8% to above 3.38 shekels. Globally, the dollar index was stable at 99.8 points. The euro eased 0.1% to above $1.15, and sterling was unchanged at $1.34.

The dollar had already fallen on Thursday evening in both the Israeli and global markets after Trump canceled a planned U.S. military strike at the last moment and said that “all sides approved” the terms of the memorandum of understanding. He described it as a preliminary deal that would end the war and launch 60 days of negotiations on a final nuclear accord.

Iran’s Fars news agency reported that, because it appeared the U.S. had accepted the proposal Tehran submitted, there was a high chance the regime would approve the same proposal. Trump also said Thursday night that the signing was close and could take place as soon as this weekend in Europe.

On the monetary-policy side, markets are now looking ahead to the Fed meeting next Wednesday, the first under new chair Kevin Warsh, with no policy change expected. Investors are also awaiting Israel’s May inflation data on Monday. A key U.S. producer-price gauge, excluding food and energy, rose 4.9% in May, matching April and coming in well below the 5.4% forecast, easing fears of a further inflation surge. Futures now price in a 63% chance of a rate hike at the Fed’s October 28 meeting.