Shekel Strengthens as Iran Deal Eases Market Anxiety and Pressures Dollar

The shekel rose sharply on Monday morning against major currencies after news of a peace agreement between the United States and Iran. As market fears eased, demand for the dollar as a safe haven fell, while the euro and the pound also weakened against the Israeli currency. Globally, the dollar hit a 10-day low as the reports pushed oil prices down and lifted appetite for riskier assets.

In Israel, the dollar slipped 0.4% to 2.908 shekels, the euro fell 1% to 3.380 shekels, and the pound dropped 0.8% to 3.918 shekels. Internationally, the euro gained 0.3% against the dollar to $1.161, the pound rose 0.3% to $1.344, and the dollar weakened 0.1% to 160.06 yen in Japan. The dollar index, which tracks the greenback against a basket of leading currencies, fell 0.2% to 99.25 points.

Pakistan’s prime minister, Shehbaz Sharif, said the United States and Iran had agreed on a deal that, in his words, includes an immediate and permanent end to military operations on all fronts. He said the signing ceremony is expected Friday in Switzerland. But the full terms remain unclear, and reports say the memorandum of understanding includes a 60-day ceasefire and does not resolve core issues, including Iran’s nuclear program.

President Donald Trump later announced that the agreement with the Islamic Republic of Iran had been completed. In a Truth Social post, he said the Strait of Hormuz would open without tolls and that the U.S. naval blockade on Iran would be lifted immediately. Iranian television also confirmed a deal, but reports from Iran said shipping in the Gulf would be regulated by Iran in coordination with Oman, contradicting Trump’s version. After Iranian claims that their commitments would begin only on Friday, Trump repeated that once the agreement is signed and mines are cleared, oil will flow again in both directions for the region and the world. He said the deal would bring “peace and security to the entire region.”

Investors are also awaiting Israeli inflation data due at 6:30 p.m. on Monday, which are expected to show a slight decline in May’s consumer price index. Analysts at Leader, headed by Yonatan Katz, said weak business and household activity support a rate cut at Bank of Israel’s next decision on July 6. They expect monthly CPI to fall 0.2%, citing lower airfares, stagnant housing prices, and a modest drop in food prices. The firm also said the stronger shekel should keep filtering through to consumers through cheaper imports, with consumer goods import prices rising 4.8% in dollar terms over the year to March 2026, but falling nearly 11% in shekel terms.