Silver Price Forecast: XAG/USD downside attempts remain contained above $38.75

• Silver reversal has met buyers at the $38.75 area, which keeps the broader bullish trend in place.
• Precious metals are struggling as deals between the US and major trading partners have boosted risk appetite.
• XAG/USD rally from late June lows is showing signs of exhaustion.

Silver (XAG/USD) is trading lower for the second consecutive day on Thursday, as the risk-on mood weighs on demand for the safe-haven precious metals, but the pair has a significant support at the $38.75 area (July 22 lows), which is keeping the bullish structure in place so far.

News that the EU is closing in on a trade deal with the US, following another deal with Japan and similar agreements with the Philippines and Indonesia, has boosted risk appetite, with investors relieved that the worst trade tariffs can be averted.

Technical Analysis: Silver's bullish momentum might be losing steam

From a technical standpoint, price action remains bullish. The rally, however, may be showing signs of exhaustion after gaining about 10% since late June. The 4-hour RSI is featuring a bearish divergence that is often a sign that a significant correction is ahead.

The mentioned $38.75 area is keeping bears at bay for now, but the pair seems unable to return to Wednesday's highs. A breach of that level would bring the confluence of the July 18 lows and the reverse trendline at $38.10 to the focus. Below here, a trend shift would be confirmed, and the next target would be the July 15, 16, and 17 lows at $37.55.

On the upside, resistance lies at Wednesday's high, at $39.40. Further up, the next target would be the 161.8% Fibonacci extension of the early July rally, at the $40.00 psychological area.