Silver Price Forecast: XAG/USD retreats below $38.50 amid a firmer Dollar

LONDON (August 27) Silver’s (XAG/USD) accelerates its reversal from last week’s highs right above $39.00, to levels below $38.50, with bears testing support at Tuesday’s low of $39.35, amid a broad-based US Dollar strength on Wednesday.

The US Dollar Index, which measures the value of the US Dollar against the world’s most-traded currencies, appreciates for the fourth consecutive day. The Greenback is drawing support from a weak Euro amid market concerns about the consequences of a highly likely collapse of the French government.

The market, so far, is shrugging off concerns about Trump’s attempts to compromise the Federal Reserve’s independence and rising hopes of immediate Fed cuts, which leaves precious metals on the defensive.

Technical Analysis: $38.35 support is a key level for bears

From a technical point of view, the XAG/USD pair shows a bearish correction from the one-month highs at $39.07 hit last Friday, with price action testing support at $38.35 (August 25 and 26 lows)

A successful break of this level would push the 4-Hour RSI below the key 50 level, increasing bearish momentum and bringing the August 22 low, at $37.70, into play. Further down the bottom of the ascending channel is now around $37.25.

To the upside, the intraday high at $37.875 and Tuesday’s high at $37.85 are likely to challenge bulls ahead of the August 22 high, at $39.10, and the July 22 high, at $39.55.

FXStreet