Silver: Channel bearish breakout hints at sustained losses ahead

The US Dollar (USD) changed course early in the American session on Thursday after reaching a fresh multi-week high. The USD index (DXY) briefly traded above 99.50 at the start of the day and is now struggling to hold the 99 mark amid a drastic shift in market sentiment. As a result, Silver bounced from an intraday low of $71.70 and currently trades around $75 per ounce.

War briefing

USD swings are directly linked to war-related headlines. The war between the United States (US) and Iran has reportedly been on pause for the last couple of weeks, with a ceasefire in place and the Strait of Hormuz blocked. Throughout the first half of Thursday, headlines indicated crossfire attacks, including those between Israel and Lebanon. The mood remained sour as speculative interest bet on no deal at all.

The sudden change in the market mood came after Axios reported that the US and Iran have reached an agreement on a 60-day memorandum of understanding to extend the ceasefire and launch negotiations on Iran's nuclear program, pending President Donald Trump's final approval. The mood remained positive, despite the latest headline indicating that Iran's Ayatollah Mojtaba Khamenei did not approve the agreement.

Mid-American session, US indexes flirt with record highs, while the barrel of West Texas Intermediate trades at the lower end of its daily range, around $88 per barrel, in line with persistent optimism.

Data brings mild relief

The US published an inflation update that came in line with market expectations and put pressure on the Greenback. The April Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge, climbed to 3.8% from 3.5% in March, matching expectations. The core annual reading printed at 3.3%, as expected. On a monthly basis, the PCE Price Index and the core PCE Price Index increased 0.4% and 0.2%, respectively.

The figures have no impact on the Fed’s rate hike odds, with market participants still anticipating an interest rate hike before the year is over.

XAG/USD Technical Outlook

The XAG/USD trades in a range, although it broke the base of a daily ascending channel coming from the March monthly low at $61.01. The latest recovery puts Silver back within familiar levels, but the lower low and the channel breakout hint at further falls ahead. Technical readings in the daily chart suggest a bearish bias, as the pair trades below the 20- and 100-day simple moving averages (SMAs) at roughly $78.11 and $81.33, respectively.

The 200-day SMA is flat near $66.75, standing as an immediate support level ahead of the mentioned March low. Technical indicators, however, fell short of supporting the bearish case, as the Momentum indicator aims marginally lower within neutral levels, while the Relative Strength Index (RSI) hovers just below the midline.

On the topside, initial resistance is now seen around the broken channel floor at $77.11, followed by the 20-day SMA near $78.11 and then the 100-day SMA around $81.33, with the channel top much higher near $94.58 acting as a distant bullish objective if buyers regain control.

(The technical analysis of this story was written with the help of an AI tool.)