Silver price action has started to tilt towards the downside this Monday afternoon appears after starting the trading week in muted tones. The XAGUSD pairing is presently trading at 17.813 after US President Donald Trump hinted to reporters that the Phase 1 deal could be inked ahead of schedule. These comments back up similar positive comments from the US Trade Representative’s office on Friday. As a result, market optimism is higher and this has switched on the appetite for risky assets while dampening demand for safe haven assets.
Apparently, traders are waiting to see if the FOMC will follow through on the expected 25bps rate cut. Markets have priced in a 25bps cut by 90% as reported by Daiwa Capital Markets.
However, the FOMC has remained divided over its monetary policy direction with at least two dissenters in the board. It remains to be seen if the FOMC may decide to hold this time or go ahead with the cut so as not spook the markets.
Going forward, the renewed risk-on sentiment could weigh on XAGUSD into tomorrow, but in a muted fashion.
The 38.2% Fibonacci retracement at 17.612 remains the near-term support. Below this area, the August 22 and 23 lows of 17.61 become relevant, and will need further risk-on sentiment to drive this play.
On the flip side, a continuation of last week’s upside move in risk-off plays targets 18.46 (September 12 high and 23.6% Fibonacci retracement) and possibly 18.65 (cluster of highs of September 23-25).Download our latest quarterly market outlookfor our longer-term trade ideas.
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