- XAG/USD lost more than 4% this week and fell to monthly lows near $22.65.
- The USD benefited due to a sour market mood.
- Markets try to decipher the next Fed movements while speakers deliver mixed signals.
On Tuesday, the XAG/USD continued its downward path and fell to its lowest since July 7th. The USD measured by the DXY trades strong above 102.50, but lower yields may cap gains. All eyes are now on inflation data on Thursday.
Federal Reserve (Fed) doves and hawks are battling it out publicly, leaving investors scratching their heads. Michelle Bowman pointed out that more increases will likely be appropriate. At the same time, John Williams showed himself comfortable with the Fed’s monetary policy, stating that the bank has the policy where it wants it to be. On Tuesday’s session, Thomas Barkin gave no highlights and said, “ I don't want to predeclare where rates will go.
According to the CME FedWatch tool, tightening expectations for the Federal Reserve remains low. The odds of a hike stand near 14% for the September meeting and rise near 30% in November. However, those odds will likely be impacted by inflation figures on Thursday, also dictating the pace for the bond market and the USD. It's worth noting that non-yielding metals tend to be negatively correlated with higher interest rates, so investors will closely monitor Thursday’s inflation data.
In that sense, the Headline Consumer Price Index (CPI) index is expected to accelerate to 3.3% YoY and the Core CPI, which is seen falling to 4.7% in the same month.
XAG/USD levels to watch
With both Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) comfortably placed in negative territory on the daily chart, the XAG/USD sellers hold the upper hand. The downward slope of the Relative Strength Index (RSI) near 30.00 further reinforces this negative sentiment, as does the MACD, which displays red bars, indicating a strengthening bearish momentum. Additionally, the metal is below the 20,100 and 200-day Simple Moving Averages (SMAs), suggesting that the bears are firmly in control of the bigger picture, leaving the buyers with tasks to accomplish.
Support levels: $22.50, $22.30, $22.00.
Resistance levels: $23.20 (200-day SMA), $23.50, $23.70, $24.00.
XAG/USD Daily chart
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
![EUR/USD stays in positive territory above 1.0850 after US data](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-euro-and-dollar-banknotes-17371247_XtraSmall.jpg)
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
![GBP/USD stabilizes above 1.2850 as risk mood improves](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/strong-pound-weak-dollar-17536259_XtraSmall.jpg)
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
![Gold rebounds above $2,380 as US yields stretch lower](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-gm187363896-28836378_XtraSmall.jpg)
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
![Avalanche price sets for a rally following retest of key support level](https://editorial.fxstreet.com/images/Avalanche/Avalanche_XtraSmall.jpg)
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
![The election, Trump's Dollar policy, and the future of the Yen](https://editorial.fxstreet.com/images/Macroeconomics/Events/US%20Elections/Donald_Trump_closeup_XtraSmall.jpg)
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.