XAG/USD moves cautiously as the US Dollar strengthens, with attention on Trump’s policies
FUNDAMENTAL OVERVIEW:
- Silver prices dip as the US Dollar sharply rebounds, with Trump maintaining his tariff hike plans.
- The President has instructed federal agencies to review trade relations with neighboring countries and China.
- Meanwhile, traders have increased dovish expectations for the Federal Reserve’s May policy meeting.
Silver (XAG/USD) saw a slight decline to around $30.50 during Tuesday’s European session, as it faces pressure from a strong rebound in the US Dollar. This follows President Donald Trump’s confirmation that the tariff hike plan on foreign countries has been delayed, though not canceled. On his first day in office, Trump stated that the proposal for universal tariff hikes remains on the table but added, “We are not ready for that yet.”
The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, sharply rebounds from a two-week low of 108.00 reached on Monday. Historically, a stronger US Dollar tends to weigh on precious metals like Silver by making them more expensive for investors.
The US Dollar tumbled on Tuesday following reports from the Wall Street Journal (WSJ) revealing that tariff hikes were not included in a presidential memo. However, the memo did indicate that President Trump has instructed federal agencies to review trade policies and assess trade relations with China and other North American countries.
Meanwhile, the decline in silver prices has been capped by falling bond yields. Lower yields on interest-bearing assets decrease the opportunity cost of holding non-yielding assets like Silver, boosting their attractiveness. The 10-year US Treasury yield dropped to 4.56%, as traders speculate that the Federal Reserve may cut interest rates in its May policy meeting.
SILVER TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Silver is trading within a up channel.
Silver is moving above 20&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 30.76
Immediate support level: 30.00
HOW TO TRADE SILVER
“After a strong bullish impulse on the higher timeframe, Silver encountered a key resistance level, leading to a sharp price reversal. The subsequent price action formed a double bottom pattern at a critical support zone. A successful break and close above the resistance level would confirm a bullish breakout and increase the probability of further price appreciation.”