- Summary:
- Silver price has closed higher for four consecutive days against the US dollar. Can it extend its gains with the US economic relief package due today?
Silver price continues its bullish momentum in today’s Asian session, ahead of the US Senate’s fiscal stimulus package announcement. XAGUSD is trading around 20 cents above its opening price around $14.42.
The precious metal has benefitted from dollar weakness which stemmed from the Federal Reserve’s open-ended QE program. There are speculations that US policymakers will be able to finalize a fiscal stimulus program later today. Should it pass, we will know the details of the government’s plan in helping the public deal with disruptions caused by the coronavirus pandemic. There are speculations that US citizens will receive checks and businesses will have access to loans through the relief program.
What could it mean for XAGUSD? We could see XAGUSD trade lower following the news. This is because it would mean that there is more support available for the US economy. On the other hand, if the deal falls through, XAGUSD could trade higher on risk aversion.
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Silver Price Outlook
On the hourly time frame, it can be seen that silver price has been on a steep uptrend. As of this writing, silver price is testing the confluence of support around $14.40. This price coincides with the 23.6% Fib level when you draw the Fibonacci retracement tool from the low of March 24 to the high of March 25. It also aligns with the rising trend line when drawing the lows of March 23, March 24, and March 25.
If buyers can sustain their momentum, we could soon see XAGUSD rally to the area around $15.40. This level offers a confluence of resistance on the 4-hour time frame. For one, it coincides with the 61.8% Fib level when you draw the Fibonacci retracement tool from the high of March 11 to the low of March 16. It also aligns with the falling trend line when you connect the highs of February 24, March 9, and March 11. Lastly, the 100 SMA falls around the area too.
On the other hand, a close below today’s Asian session lows on the 1-hour chart could indicate more downside potential for silver price. Should this happen, the next support could be at $13.15 where XAGUSD bottomed yesterday.