Current trend

As a result of the strengthening of the US dollar against the rhetoric of US Federal Reserve Chairman, Jerome Powell, the XAG/USD pair is trading in the support area of 22.50–22.00.

The official said that inflation is adjusting much more slowly than estimated, and therefore it will take longer to reach the target level of 2.0%. At the end of the June meeting, the regulator kept the interest rate at 5.25% but signaled the possibility of resuming the tightening cycle of monetary policy in July. At the moment, about 79.0% of analysts expect an increase in the cost of borrowing by another 25 basis points up to 5.50%. An increase in the indicator leads, as a rule, to the strengthening of the dollar and the sale of alternative assets, including precious metals. Today at 15:30 (GMT 2), the focus of investors will be the data on the country’s gross domestic product (GDP), which is estimated to drop from 2.6% to 1.4%.

Local correction continues on the silver contracts market: according to the latest report of the US Commodity Futures Trading Commission (CFTC), last week, the number of net speculative positions in the asset decreased from 23.7K to 20.1K. Swap dealers have a balance of 38.320K from the “bulls” against 44.609K from the “bears,” and last week, the buyers increased the number of contracts by 0.700K, and the sellers reduced them by 2.622K, which indicates increased prospects for local growth.

The long-term trend in the instrument remains upward but now a correction is developing, within which the asset fell from the resistance area of 24.50–24.00 to the support area of 22.50–22.00. In case of a breakdown of 22.00, the price will reach 21.50, and in case of holding the area of 22.50–22.00, positive dynamics may develop to 24.50–24.00.

The medium-term trend is downward, and within its framework, last week, the quotes reached the target zone 2 (22.32–22.13), where large sales were closed, causing the price to bounce upwards. A correction to the trend is now developing, within which the XAG/USD pair can reach the key resistance at 24.19–24.00, from where it is worth considering new sales with the target at the low of last week at 22.13.

Support and resistance

Resistance levels: 24.00, 24.50.

Support levels: 22.50, 22.00, 21.50.

Trading tips

Long positions may be opened from 22.50 with the target at 24.00 and stop loss around 22.00. Implementation period: 9–12 days.

Short positions may be opened below 22.00 with the target at 21.50 and stop loss around 22.25.