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- The XAG / USD bulls were denied a deeper correction as the greenback hardens.
- The U.S. dollar has benefited against a number of currencies by nations that have seen a new wave of coronavirus outbreaks.
Silver was lower on Tuesday, down over 1.2%, with Spot XAG / USD currently trading at $ 25.78, hovering between a low of $ 25.52 and a high of $ 26.12.
The recent archenemy of the precious market, the greenback, has proven problematic for the bulls, who have been denied a deeper correction to the current bearish bias.
The US dollar climbed to a one-week high on Tuesday, posting its largest single-day gain in about two weeks.
In New York afternoon trading, the dollar index DXY, a measure of its value against six major currencies, rose 0.37% to 92.019, recording its largest daily percentage gain since about mid-June.
The greenback has benefited against a number of currencies from nations that have seen a new wave of coronavirus outbreaks that have reduced risk in financial and commodity markets.
Indonesia is struggling with record high cases, while Malaysia will extend a lockdown and Thailand has announced new restrictions. Some states in Australia have also tightened the restrictions on movement.
At the same time, US consumer confidence soared in June and Fed officials’ positive assessment of the labor market outlook also benefited the US dollar as it bolstered the US nation’s positive growth prospect.
“Regional Fed Presidents Barkin and Kashkari both said they expect strong labor market data in the coming months – a view likely to include an expanded vaccination program, ongoing incentives and evidence of very strong labor demand,” analysts at ANZ Bank explains.
“But with strong prospects, it feels like the parameters are forming around the tapering,” added the analysts.
“ The Fed needs sustained inflation of 2.0%, which it is currently attaining, and significant employment growth. Based on the labor market guidelines, there seems to be a consensus at the FOMC that these conditions could be met in the third quarter. ”
The analysts also note that all eyes will be on the June non-farm payroll data to gauge momentum and starting point.
“The market expects an increase of 700,000, which would be a slight acceleration compared to May.”
The potential for a stronger job report this week could inhibit positive inflows into precious metals for now.
XAG / USD Technical AnalysisUSD
The bulls have been denied a fuller retracement to the 38.2% Fibonacci of the previous bearish impulse and instead the price is now testing the lower levels of the consolidation period.
The price has actually hit a new low:
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