Home Forex XAG/USD consolidates around $22.70 ahead of US inflation data

XAG/USD consolidates around $22.70 ahead of US inflation data

by SuperiorInvest


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  • Silver trades flat around $22.70 as focus remains on US inflation data.
  • The mild inflation data would raise hopes for an early rate cut by the Fed.
  • The price of silver continues to face the pressure of the descending trend line located from $24.60.

silver price (XAG/USD) traded back and forth in a narrow range around $22.70 at the end of the Asian session on Tuesday. The white metal is struggling for direction as investors expect United States Consumer Price Index (CPI) data for January to be released at 13:30 GMT.

S&P500 futures remain on the back foot in the Tokyo session, pointing to a decline willingness to take risks market participants. The American dollar The index (DXY) remains positive but is trying to extend above the decisive resistance at 104.25. Yields on 10-year US Treasuries rose to 4.18%.

US inflation data is expected to weigh on the interest rate outlook. Traders were betting on a rate cut of 25 basis points (bps) in May, according to CME's Fedwatch tool. A sharp decline in inflation data would raise expectations of an early rate cut by the Federal Reserve (Fed).

In the latest statement on monetary policy, the chairman of the Fed Jerome Powell ruled out expectations of a rate cut in March as the central bank is not convinced inflation will fall towards the 2% target. Fed policymakers also did not favor aggressive rate cuts because it could once again increase price pressures.

Technical analysis of silver

The silver price is facing pressure while extending a rally above the descending trend line drawn from December 22nd to a high of $24.60. The asset is managing to hold above the 50-time exponential moving average (EMA) at $22.63, indicating that the short-term outlook is bullish.

The 14-time Relative Strength Index (RSI) aims to move above 60.00. If the RSI (14) makes it, the bullish momentum will be triggered.

Silver 4 hour chart

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