Silver Price Forecast: XAG/USD rallies to $38.40 favoured by a softer US Dollar 

• Silver extends gains for the third day in a row, buoyed by US Dollar weakness.

• Upbeat US corporate earnings and dovish Fedspeak are weighing on the safe-haven US Dollar.

• XAG/USD corrective reversal has been capped above previous highs, at the $37.55 area.
  

Silver (XAG/USD) is rallying for the third consecutive day on Friday, with bulls testing July 15 highs of 38.40 at the time of writing, as the US Dollar falls alongside US Treasury yields amid higher risk appetite.

Corporate earnings reports from Netflix, the Chipmaker TSMC, PepsiCo, and United Airlines, among others, beat market expectations on Thursday, boosting demand for equities and risk-sensitive assets to the detriment of safe havens like the US Dollar.

These reports, coupled with dovish comments from Fed Governour Christopher Waller, who maintained that the bank should cut interest rates in July, citing downside risks for the labour market and economic growth, are contributing to keeping the US Dollar on the defensive on Friday.

Technical Analysis: Correcting lower within a broader bullish trend

From a technical perspective, the pair´s corrective reversal from long-term highs above $39.00 has been capped above the reverse trendline of a previous bullish channel, and the pair is trading higher again.

Bulls are testing the 15 July high at $38.40, with the 4-hour RSI steady at levels above 50, which suggests that further appreciation is likely. A confirmation above that level brings the July 14 high, at $39.15, to the focus.

A rejection from current levels, on the contrary, might find support at the mentioned trendline, now at $37.8, ahead of the July 15, 16, and 17 lows, at $37,60. Below here, the 50% Fibonacci retracement of the June-July rally, and the July 6 low, at $37.25, might attract selling pressure.