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Silver Price Analysis: XAG/USD finds support near $22.50, downside remains intact

Source Fxstreet

Silver price gauges an interim cushion near $22.50, more downside looks likely as Fed rate cut bets ease.
Strong US consumer spending has dented hopes of rate cut by the Fed in March.
Silver price hovers near the horizontal support of the descending triangle chart pattern.

Silver price (XAG/USD) discovers an intermediate support after a sharp correction to near $22.50 in the late Asian session. The near-term demand for the white metal is still downbeat as trades have pared bets supporting a rate cut by the Federal Reserve (Fed) in March.

S&P500 futures have posted nominal losses on board in Tokyo, portraying further decline in the risk-appetite of the market participants. The US Dollar Index (DXY) has corrected to near 103.25 after failing extend rally above fresh monthly high of 103.63. 10-year US Treasury yields have eased slightly to near 4.1%.

Investors are losing conviction towards an interest rate cut by the Fed in the march monetary policy meeting due to absence of support from United States economic indicators. After a stubborn inflation report for December, Retail Sales data outperformed the market consensus. The US consumer spending rose at a stronger pace of 0.6% against expectations of 0.4% and the prior reading of 0.3%.

Strong US Retail Sales were prompted by robust demand for motor vehicles and online purchases. Considering resilience in the US economy, Fed Governor Christopher Waller advised the need of maintaining a ‘careful and methodical’ approach while reducing interest rates.

Silver technical analysis

Silver price trades near the horizontal support of the Descending Triangle chart pattern formed on a four-hour scale, which is around December 13 low of $22.50. The downward-sloping trendline of the aforementioned chart pattern is plotted from December 3 high at $25.92.

The 50-period Exponential Moving Average (EMA) around $23.00 continues to act as a barricade for the Silver price bulls.

Meanwhile, the 14-period Relative Strength Index (RSI) has slipped into the bearish range of 20.00-40.00, which indicates that a bearish momentum has been triggered.

Silver four-hour chart

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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