Silver consolidates the technical drop and eyes market's reaction to USD

  • XAG/USD moves into a critical support area as the US dollar firms. 
  • Silver prices now depend on two things, the US dollar positioning and global economic growth. 

As per the prior analysis, Silver Price Analysis: Bearish W-formation could draw in the bid, the price indeed fell to the projected targetted area. 

More on that below. 

Meanwhile, from a fundamental basis, the market's focus was on the Federal Reserve's Jerome Powell. 

In a nutshell, the dollar recovered into the event and was unnerved from a status quo delivery from the Fed's chair. 

The bond market was relieved that the Fed will continue its purchase and the stock market recovered on the lower for the longer rates theme.

Meanwhile, the US dollar is very short in positioning.

Should the narrative flip towards the US economic outperformance, given a faster vaccine roll-out and the possibility of fuller employment, than say that of Europe, it could be enough to see a seismic shift in positioning, regardless of fiscal stimulus. 

Therefore, even though silver might out-do its sister currency, gold, due to its industrial qualities, a faster pace of global economic recovery and demand for the metal, US dollar headwinds could still weigh.

Silver technical analysis

Meanwhile, as per the prior analysis, the price has now fallen to where a period of consolidation would be expected before it breaks out of the boundaries of support and resistance.

Prior analysis, daily chart

Live market, daily chart

Moving on to the 4-hour chart, the price is bound by the box:

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

AUD/USD shrugs off equities slide, aims to 0.8000

The AUD/USD pair quickly recovered the 0.7900 threshold after a knee-jerk to 0.7879, now trading around 0.7910. Australian quarterly wage growth coming up next.


Gold: Bears engaging below firm resistance, targetting $1,750

The daily chart shows that the price has been resisted at the structure and a 50% mean reversion of the last bearish impulse which has proven to be a firm resistance. 

Gold news

RBNZ Preview: To hold fire, upgrade its economic forecasts

New Zealand’s relative success in combating the coronavirus pandemic has propelled a swift economic recovery. Therefore, the Reserve Bank of New Zealand (RBNZ) could remain in a wait-and-see mode on Wednesday before it announces any adjustments to its monetary policy decision later this year.

Read more

Crypto market menaced as it bleeds amid $6 billion liquidations

Cryptocurrencies are gasping for air after corrections occurred across the board. The bloodshed has seen Bitcoin lose over 14% in 24 hours, testing support at $45,000. Ethereum did not escape the freefall, which has led to losses below $1,500.

Read more

US Dollar Index: Formidable support is located at 90.00

DXY tests and rebound from the key 90.00 neighbourhood. Further south of this level comes in the 2021 lows at 89.20.

US Dollar Index News