Silver (XAG/USD) is navigating through a challenging phase, with its price extending a two-day downtrend. It is now reaching the pivotal support level at $22.20 during Tuesday’s European trading hours. This downward trajectory is largely attributed to the Federal Reserve’s diminishing expectations of swift rate cuts in light of the United States’ solid economic indicators.

Risk Appetite and Dollar’s Influence

The optimism seen in S&P500 futures during the Asian trading session has largely dissipated, reflecting a shift away from riskier assets among investors. Concurrently, the US Dollar Index (DXY) has witnessed a notable rebound, approaching 104.60, as market sentiment tilts back towards safe-haven currencies.

This shift is underscored by anticipations that the Federal Reserve’s rate reductions may occur later than previously anticipated by investors. Meanwhile, yields on 10-year US Treasuries have receded to around 4.14%, suggesting a cautious stance among bond investors.

Federal Reserve’s Stance and Upcoming Economic Indicators

Market expectations for early rate cuts have been recalibrated following Federal Reserve policymakers’ caution against hastening such measures. Concerns are that premature rate adjustments could spur demand excessively, potentially reigniting inflationary pressures.

With a relatively quiet US economic calendar this week, investor attention turns towards Chicago Federal Reserve Bank President Loretta Mester’s upcoming remarks for further insights into the Fed’s interest rate policy direction.

Silver Price Forecast: Technical Outlook

Silver navigates a challenging landscape in the current market, marked by a slight decline of 0.11%, positioning itself at $22.32. The pivot point at $22.27 is crucial, with immediate resistance levels observed at $22.47, $22.71, and $22.89.

XAG/USD Live Chart

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Silver Price Chart

Support levels are critical to watch, starting at $22.12, with further lines at $22.48 and $21.93, indicative of potential fluctuations. The Relative Strength Index (RSI) signals at 37, suggesting an emerging bearish sentiment, while the 50-day Exponential Moving Average (EMA) at $22.65 points towards a cautious market outlook.