Why is islam and judaism similar?

Brief answer is: Both the religions spring up from one source-Almighty God (Allah in Arabic). Though all the Prophets (May peace be upon them) preached one and the same religion- Islam-Submission to Almighty God, Judaism and Islam in the present shape was founded by Hazrat Abraham (AS).

It is better to say that Judaism, Christianity, and Islam are similar. Here is a translation of a verse from the holy Qur'an, Chapter 3 - Al-i-Imraan, verse 84: Say (O Prophet Muhammad), "We believe in Allah, and in what has been revealed to us and what was revealed to Abraham, Ismail, Isaac, Jacob, and the Tribes, and in (the Books) given to Moses, Jesus and the Prophets, by their Lord (Rab). We make no distinction between one and another among them, and to Allah do we bow our will (in Islam).

Ayat 85: If anyone desires a religion other than Islam (Submission to Allah), never will it be accepted of him; and in the hereafter he will be in the ranks of those who have lost (All spiritual good)

The religion given by Almighty God is for the guidance of whole mankind It is not restricted for one nation, country or people. Unfortunately, the Jews restricted the religion to themselves. When they played false with their religion, Hazrat Jesus, Christ (May peace and blessings of Almighty God be upon him) came for their guidance. In stead of believing in him, helping him and following him, the Jews turned against him and plotted to crucify him.