Silver Video 26.05.20.
Weaker U.S. Dollar Provides Additional Support To Silver
Global markets are in a rally mode today, and silver is no exception. Silver has settled above $17.00 and looks ready to test the next resistance level at $17.50.
The optimism is widespread so the U.S. dollar, which serves as a safe haven asset of last resort, is losing ground. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has declined to the 99 level.
Weaker U.S. dollar is a bullish catalyst for precious metals as it makes them cheaper for buyers who have other currencies. The U.S. Dollar Index has been in the range between 99 and 101 for two months, and a downside move out of this range may provide additional support for silver.
Meanwhile, gold is mostly flat as its safe haven “component” is more significant than that of silver. For silver, industrial demand is very important, so the improvement of economic outlook provides material support for silver.
In another bullish development for silver, gold/silver ratio has dipped below 100 and looks ready to continue the current downside trend. Gold/silver ratio was below 90 ahead of the coronavirus crisis, and a return to pre-crisis levels will provide material upside for silver.
Silver managed to settle above $17.00 and has good chances to test the nearest resistance level at $17.50. RSI stays elevated but is not extremely overbought, which means that silver has an opportunity to continue the previous upside move without a pullback.
In case silver gets above $17.50, it will likely gain additional upside momentum and head towards the next resistance level at $18.15.
On the support side, the nearest support for silver is located near $17.00. In recent trading sessions, silver made several attempts to settle below $17.00 but these attempts were met with increased buying activity.
If silver manages to get below $17.00, it will gain downside momentum and head towards the next support at pre-crisis levels at $16.50. In addition to support at $16.50, silver could also get support at the 20 EMA at $16.30, so it won’t be easy to get through this support area on the first attempt.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
More From FXEMPIRE:
- USD/JPY Price Forecast – US Dollar Drifts Lower Against Japanese Yen
- U.S. Dollar Index (DX) Futures Technical Analysis – Testing Major Retracement Zone at 99.245 – 98.130
- S&P 500 Price Forecast – Stock Markets Smash Into Major Level
- Gold Price Futures (GC) Technical Analysis – Sustained Break Under $1728.70 Sets Bearish Tone
- Gold Price Forecast – Gold Markets Pullback Toward Support
- EUR/USD Price Forecast – Euro Testing Top of Range