- Recent US bond yields and the rise in the dollar have weighed heavily on silver.
- XAG/USD hit new one-month lows and was close to hitting $24.00 earlier, but has since recovered to around $24.30.
- The bears are looking for a break below $24.00 and a test of the 200 DMA at $23.87 just below.
The recent rise in US and world government bond yields, driven primarily by aggressive Fed comments on Thursday from Chairman Jerome Powell and other bank policymakers, plus a further rise in the US dollar which has seen DXY momentarily hit new yearly highs above 101.00 has weighed heavily on the pair (XAG/USD) on Friday.
XAG/USD at one point hit $24.05 per troy ounce to post new lows for the month and observe March lows at $23.97, but has since recovered to around $24.30, where it is still trading with daily losses of around of 1.4%. The bounce from the lows was facilitated by a pullback in DXY to 100.80, and amid buying ahead of the 200 day moving average at $23.87.
The Fed will go into blackout this weekend ahead of the May 3-4 policy meeting. Several banks have increased their Fed tightening calls in recent days in the wake of recent rhetoric, with Nomura notably calling for a 50bp move in May followed by two 75bp hikes at the next two meetings in June and July. .
While there will be no new rhetoric from the Fed to boost tightening expectations before the next meeting, that does not mean that US yields and the US dollar will not continue to trade with a bullish bias, as has been the case. case now for many consecutive weeks. If that continues, a break of XAG/USD below the $24.00 level and its 200 DMA is on the cards. Looking ahead, a potential catalyst for price action could come in the form of Friday’s preliminary US PMI survey results for April, scheduled for release at 14:45 BST.
Technical levels
Source: Fx Street
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