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- XAG / USD collapsed late during the US session as the greenback rallied on a restrictive Fed.
- A surprisingly restrictive Fed chairman Jerome Powell weighed on the silver drop.
- The Relative Strength Index and the moving averages on the 1-hour chart support the bullish bias of XAG / USD.
During the US session, the XAG / USD hovered around $ 22.60-$ 23.16. The trigger was a restrictive monetary policy declaration by the Federal Reserve. However, at the start of the Asian session, silver is trading at 22.69, up 0.11% at the time of writing.
The FOMC released its monetary policy statement on Wednesday. The Fed left rates and the QE program unchanged.
The Fed’s bond tapers around the corner
Regarding the bond taper, the Fed said that “the committee believes that a slowdown in asset purchases may soon be warranted”. The reaction on the raw material market was immediate. Even so, the sentence looked restrictive. Silver rose to a new weekly high of $ 23.16. But when the Fed chairman Jerome Powell took center stage, XAG / USD plunged $ 0.60 to $ 22.57.
Summing up some of his remarks, he said that “the Fed has discussed the appropriate pace of the curtailment once the conditions are met”. He also added that “there is broad support in the committee for the timing and pace of the rejuvenation.” Regarding the relationship between the job market and QE reduction, he said he doesn’t need a solid job report to continue with the tapper.
XAG / USD Price Prediction: Technical Outlook.
1 hour chart
XAG / USD is trading over the short term time frame of simple moving averages (SMAs) at $ 22.69. In order for the bulls to resume upward pressure, they will need to reclaim $ 23.00. Should this level be breached, the next supply zone would be the September 22nd high at $ 23.12. A decisive break in the latter would set free $ 23.50.
On the downside, a break below the September 22nd low and the clash of the 50 and 100 SMA at $ 22.55 could result in further losses. The first area of ​​support would be $ 22.34. The following demand zones would be the September 20 swing lows of $ 22.14 and the 2021 lows of $ 22.01.
The relative strength index is 50, slightly higher, which supports the bullish trend.
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