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Silver Price Forecast: XAG/USD struggles amid strong US data, Fed’s caution stance

  • Silver price down 1.58%, nearing $22.50, amid strong US Retail Sales and Industrial Production data.
  • Waller's comments on cautious rate cuts prompt market to rethink Fed easing expectations."
  • Technical outlook: Further silver price decline possible, with focus on $22.00 and $21.88; $23.00 critical for recovery.

Silver price stays depressed for the second straight day, though it appears to have bottomed at around the $22.50 area for the third occasion during the last couple of months, as it loses 1.58% after hitting a daily high of $22.94.

XAG/USD falters, bottoms at around $22.50 as investors adjust Fed rate cut trajectory

Fundamentally speaking, solid economic data from the United States (US) bolstered the Greenback (USD) as US Treasury yields resumed to the upside. Retail Sales for December rose by 0.6%, exceeding forecasts of a 0.4% jump and November’s reading. Lately, the US Federal Reserve announced that Industrial Production improved modestly by 0.1%, after contracting and stagnating in October and November of last year.

Meanwhile, Fed officials continued to push back against aggressive rate cuts, even though most of them see at least three rate cuts, as portrayed by December’s Summary of Economic Projections (SEP). Yesterday’s comments of Fed Governor Christopher Waller, who said that he supports rate cuts but added the US central bank is in no rush to relax policy. That sparked a reaction on bets that the Fed would ease policy faster than expected, as seen with investors trimming odds from 175 basis points of rate cuts at the beginning of the week to 148.

XAG/USD Price Analysis: Technical outlook

Therefore, further Silver’s weakness is expected, though sellers must push prices below $22.50. A breach of that level will expose the $22.00 a troy ounce figure, followed by the November 13 swing low of $21.88. Further downside is seen at the October 3 low of $20.69. Contrarily, if buyers regain $23.00, that could pav the way for challenging the 100-day moving average (DMA) at $23.20.

XAG/USD Technical Levels

 

Forex Today: Dollar’s rally falters near 103.70

Further reduction of bets on an interest rate cut by the Fed in March propelled the USD Index (DXY) to a new yearly high and aligned with the extra narrative suggesting the ECB could wait until the summer to trim its rates, which eventually appears to have bolstered the late bounce in the single currency.
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GBP/JPY edges into six-week high on approach to 190.00

The GBP/JPY found fresh chart paper on the high side towards the 190.00 major handle, climbing over a full percent on the day as the Pound Sterling (GBP) catches a lift against the beleaguered Japanese Yen (JPY) after a better-than-expected print in the UK’s Consumer Price Index (CPI) inflation.
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