Silver Price Analysis: XAG/USD rises amid USD weakness ahead of FOMC decision

XAG/USD gained ground and rose $24.90, showing 1% gains.
The USD DXY trades soft near 101.10, while US Treasury yields are falling.
Markets await a 25 bps hike by the Fed; messaging will be critical.

Patricio Martín FXStreet

On Wednesday, the XAG/USD Silver spot price capitalised on the USD softness and falling US yields and jumped near the $25.00 area.

Ahead of the Federal Reserve (Fed) decision, the USD is trading soft, with the DXY index setting a consecutive day of losses after five straight days of gains. In addition, the 2-year American bond yield stands neutral at 4.88% and the 5 and 10-year rates fell to 4.14% and 3.87%, respectively, allowing the XAG/USD to gain traction.

Regarding the decision, markets have already priced in a 25 basis point (bps) hike, and the focus is on the Fed’s posture regarding forward guidance. Chair Powell commented in June that the considered “prudent” additional hikes but that monetary policy decisions will remain data dependent. As for now, according to the World Interest Rate Possibility (WIRP) tool, markets discount 20% odds of a hike in September and then 45% probabilities in November.

XAG/USD Levels to watch

The daily chart shows that the XAG/USD's technical outlook is neutral for the short term as indicators have turned somewhat flat, awaiting a catalyst. The Relative Strength Index (RSI) has a slight positive slope, while the Moving Average Convergence Divergence (MACD) prints fading green bars. However, the 20 and 100-day Simple Moving Averages (SMA) have already performed a bullish cross which could offer critical support to the grey metal. Traders should pay attention to these movements.

Support levels: $24.30, $24.00, $23.90 (20-day SMA).

Resistance levels: $25.00, $25.30, $25.50.

XAG/USD Daily chart

XAG/USD

Overview
Today last price	24.91
Today Daily Change	0.23
Today Daily Change %	0.93
Today daily open	24.68

Trends
Daily SMA20	23.82
Daily SMA50	23.6
Daily SMA100	23.79
Daily SMA200	22.97

Levels
Previous Daily High	24.73
Previous Daily Low	24.3
Previous Weekly High	25.27
Previous Weekly Low	24.59
Previous Monthly High	24.53
Previous Monthly Low	22.11
Daily Fibonacci 38.2%	24.56
Daily Fibonacci 61.8%	24.46
Daily Pivot Point S1	24.41
Daily Pivot Point S2	24.14
Daily Pivot Point S3	23.98
Daily Pivot Point R1	24.84
Daily Pivot Point R2	25
Daily Pivot Point R3	25.27

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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