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- Silver price tumbles to near $58.40 as the US Dollar attempts to snap a three-day losing streak.
- The Fed left interest rates unchanged on Wednesday, as expected.
- Higher oil prices will keep the upside in the Silver price restricted.
Silver price (XAG/USD) is down almost 1% to near $58.40 during the Asian trading session on Friday. The white metal faces selling pressure as the US Dollar (USD) rebounds slightly, attempting to snap a three-day losing streak.
At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.23% higher to near 100.20.
Technically, a higher US Dollar makes the Silver price an unfavorable risk-reward bet for investors.
However, the Silver price could rebound as the outlook of the US Dollar has become vulnerable following the Federal Reserve’s (Fed) monetary policy announcement on Wednesday, in which it left interest rates unchanged and committed to “no forward-guidance” policy.
Dollar slides as Fed rhetoric fails to convince markets
Strategists at Brown Brothers Harriman note that the USD “dropped sharply for two reasons.” They explain that, first, “markets unwounded the residual 30% odds of a July hike,” and second, Fed Chair Kevin Warsh “failed to turn tough inflation rhetoric into a credible policy.” BBH warns that Warsh “may now find himself in a more consequential battle with markets that can further raise long-term yields, weaken the dollar, and force the Fed into a more painful response.”
Elevated oil prices due to constrained global energy supply amid the ongoing military aggression between the United States (US) and Iran are likely to keep the Silver price’s upside limited.
Higher oil prices boost global inflation expectations, which forces central banks to tighten monetary conditions. Such a scenario bodes poorly for non-yielding assets, like Silver.
Silver technical analysis
XAG/USD trades lower at around $58.36, keeping a bearish near-term tone as it holds beneath the 20-day Exponential Moving Average (EMA) at $58.91. The positioning below this short-term trend gauge suggests rallies remain corrective for now, while the Relative Strength Index (RSI) around 46 stays in neutral territory, hinting at subdued downside momentum rather than an outright oversold condition.
On the topside, initial resistance is defined by the 20-day EMA at $58.91; a daily close above this level would be needed to ease the current bearish bias and open the door to a deeper recovery. Looking up, the next resistance level would be the July 22 high at $60.94.
On the downside, the July 28 low at $56.64 and the July 17 low at $54.77 are key support levels.
