Silver failing to hold its bullish tone, US dollar meets support

  • Silver is attempting to recover but there is a long way to go until the bulls will be in the clear. 
  • The US dollar is down, but there are prospects of a recovery. 

At the time of writing is trading at $25.50 and flat on the day, stuck at an end of month tight range of $25.49 and $25.50. 

The price has pulled back from the overnight highs of $25.80 made earlier in the New York session that it achieved after rallying from a low of $24.96.

Since the Federal Reserve, investors have continued to move out of the US dollar, likely squaring long positions at month-end on the back of a more dovish Fed chair.

The US dollar on Thursday was shot down all the way down into a strong area of liquidity as measured against a basket of six other currencies, DXY.

The index was 0.4% lower at 91.85, its lowest since June 28. 

The US dollar is now sitting at a discount for the bullish of bulls after the weaker hands were shaken out. 

Bulls will recognise the divergence between central banks and how the greenback is favoured at times of extreme risk aversion in comparison to its counterparts.

This leaves a low bar for a correction from the current demand area below 92.00:

As the Fed has indicated, there are only a few more months of crisis-era QE left for markets.

Real rates would be expected to rise on the back of nominal yields moving higher over time as investors once again begin to factor in a rate hike from the Fed.

Silver technical analysis

A break above the 61.8% Fibo near 25.90 of the weekly bearish impulse will leave the bulls in good stead for higher highs.

Bulls will be looking for a break to back above the weekly counter trendline and within the bullish trend again.

Hourly chart

The bulls will be keen to hold onto this support or face giving over control to the bears.


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