Shekel Loses Altitude As Domestic Political Turmoil Simmers

The shekel underperforms all its EMEA peers as the domestic political crisis continues, with Israeli media outlets reporting that more than 100 elite reservists from the Military Intelligence's Special Operations Division threatened to stop showing up for duty if PM Netanyahu's government presses ahead with a controversial judicial overhaul.

• Meanwhile, the Cabinet greenlighted a biannual spending plan for the coming two years today, penciling in ILS484bn worth of expenditures for 2023. The budget now has to be passed by parliament to become law, otherwise Israel will need to hold a fresh election.
• The Times of Israel reported that during a budget meeting yesterday Bank of Israel Governor Yaron warned ministers that their sweeping reform of the judiciary could trigger an economic crisis. His concerns were reportedly shared by the Finance Ministry's Chief Economist Greenberg.
• Spot USD/ILS has added 473 pips and last changes hands at ILS3.6781, approaching key resistance from the 76.4% retracement of the 2020 - 2021 sell-off/Feb 22 cyclical high at ILS3.6892/3.6927, followed by the round figure of ILS3.7.
• The RSI remains in overbought territory, last sitting at 75.7, with participants on the lookout for its pullback below the 70 threshold, which would suggest that topside momentum might be wearing off.
• Wells Fargo flagged in their report yesterday that they see the shekel as oversold and believe that the risk of a central bank intervention has increased, which sets the stage for a rebound in the weeks ahead.