Silver Price Analysis: XAG/USD extends three-day downtrend below $28.00 amid firmer USD

• Silver refreshes intraday low as US dollar picks up bids.
• Greenback shrugs off downbeat Treasury yields ahead of US Retail Sales, FOMC.
• Risk catalysts keep driver’s seat, Fed’s move eyed.

Silver (XAG/USD) remains on the back foot for the third consecutive day, taking offers around an intraday low of $27.59 amid early Tuesday. In doing so, the white metal reacts to the latest pick-up in the US dollar index (DXY) amid cautious markets.

DXY regains upside momentum, following a sluggish start to the week, while picking up bids near 90.53, up 0.05% intraday, by the press time. The greenback gauge seems to ignore the recent fall in the US 10-year Treasury yields amid the market’s indecision ahead of Wednesday’s Federal Open Market Committee (FOMC). That said, the US 10-year Treasury yields drop for the first time in three-day, down 1.4 basis points (bps) to 1.487% while writing.

It should, however, be noted that the recent recovery in the US inflation expectations, per the data conveyed by the Federal Reserve banks of New York and St. Louis, underpin safe-haven demand of the greenback amid fears of Fed’s tapering.

Also on the same line could be the chatters that more Fed policymakers will convey their bullish bias for the dot-plot in Wednesday’s meeting.

Furthermore, fears of the Delta variant of the covid and full markets’ reaction to the Group of Seven (G7) meeting updates, mainly concerning China news, exerts additional downside pressure on the market sentiment and weighs on the silver prices.

Today’s US Retail Sales may offer intermediate bounce to the white metal if the actual readings for May match downbeat forecasts, by probing the odds of the Fed’s tapering. However, traders are likely to remain cautious and may choose to extend the previous downtrend ahead of the Fed’s verdict.

Read: Federal Reserve Preview: First up, then down? Playbook for trading the Fed

Technical analysis

A clear downside break of 21-day SMA directs silver prices to an ascending support line from April 29.