- Silver is moving at a critical resistance level as the US dollar collapses.
- US ADP employment data is a negative prelude to the non-farm payroll showdown, which puts pressure on the dollar.
The price of silver continues to test the ceiling of dynamic resistance as the US dollar struggles to stay within bullish territory.
As of this writing, XAG / USD is trading at $ 24.17 between a low of $ 23.76 and a high of $ 24.26.
The US dollar came under increased pressure on Wednesday, measured against a basket of major currencies, (DXY index), following a US labor market report that has exceeded expectations by a mile.
The data could be seen as a prelude to the highly anticipated Non-Farm Payroll report this Friday.
ADP’s National Employment Report has shown that private payrolls increased by 374,000 in August, up from 326,000 in July, but well below the 613,000 expected.
The data has been perceived to indicate a broad cooling of the labor market recovery amid a persistent worker drought.
This brings to the fore the risks of the highly contagious COVID Delta variant and clouds the prospects for an imminent reduction announcement by the US Federal Reserve.
On the other hand, factory activity has surprised to the upside, expanding at a slightly accelerated pace last month due to a rebound in new orders.
The Purchasing Managers Index (PMI) from the Institute for Supply Management (ISM) added a modest 0.4 points to 59.9.
The final shot of the manufacturing PMI for August also returned a positive reading of 61.1.
However, the DXY index is in the red at 0.23% at the time of this writing and has moved into a critical structure near the June highs, which could be seen as the last defense before 91.80:
DXY daily chart
Silver price analysis
The price of silver is testing a dynamic resistance level and a gap there will put the bulls in a good position for the prospects of a medium-term bullish breakout.
On the downside, 23.50 protects the support levels at 23.00 / 22.80.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
