Against the backdrop of a sharp weakening of the US dollar and again increased political uncertainty in the US, precious metals are once again rising in price. Last week, the dollar showed the strongest decline since May. Chairman of the US Federal Reserve Board, Janet Yellen, was more cautious in favor of further raising interest rates in the US. Published on Friday, inflation data in the US, which turned out to be much weaker than expected, triggered large-scale sales of the US dollar. At the moment, investors estimate the 48% probability that the Fed will perform another rate hike this year.
Yesterday, the dollar received another blow after the news that the Republicans had failed to abolish the Obamacare Act. Another failure of the Republicans again brought back concerns about the ability of the presidential administration to fulfill pre-election promises to stimulate the US economy.
The political uncertainty, aggravated in the US, weak US macroeconomic indicators, which contribute to the weakening of the dollar, once again raise investors' interest in buying precious metals, including silver. Precious metals do not bring investment income. However, in the context of increasing economic or political uncertainty, the demand for precious metals as a safe haven is growing.
We are waiting for the data from the USA today. At 12:30 (GMT), data from the US primary housing market for June. The indicator of the dynamics of new building permits is an important indicator of the housing market. If the data prove to be better than the forecast (1.20 million new permits), the dollar will strengthen on the foreign exchange market. Otherwise, and with the arrival of weak data, the US dollar will decrease, and silver prices will rise.
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Support and resistance levels
The pair XAG / USD was able to break through the short-term resistance level at 16.02 and is growing, pushing back at the end of last week from the support level of 15.60.
Nevertheless, more confident growth of the pair XAG / USD and consideration of long positions on it can be said after the pair XAG / USD consolidates above the important short-term resistance level of 16.37 (EMA200 on the 4-hour chart).
In the meantime, the negative medium-term dynamics prevails, while the pair XAG / USD is traded in the descending channel on the daily chart, well below the resistance level of 17.05 (EMA200, EMA144 on the daily chart). The lower boundary of the channel passes near the support level of 14.30 (the minimums of January 2016).
In case of breakdown of the support level of 16.02, the fall of the pair XAG / USD will resume.
The level of 14.30 will become the target mark with a further decline in the pair XAG / USD. A more distant goal is the level of 13.65 (the minimum of the global wave of decline in the pair XAG / USD from September 2012).
Support levels: 16.02, 15.60, 15.25, 14.90, 14.30, 13.65
Resistance levels: 16.37, 16.68, 17.05
Trading Scenarios
Sell Stop 16.10. Stop-Loss 16.38. Take-Profit 16.00, 15.25, 14.90, 14.30
Buy Stop 16.38. Stop-Loss 16.10. Take-Profit 16.68, 17.05, 17.10
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