Silver Price Forecast: XAG/USD is testing resistance at $38.30

• Silver extends its rally to test resistance at $38.30
• The Dollar remains on its back foot amid higher hopes of upcoming Fed rate cuts.
• Momentum indicators have reached oversold levels, pointing to a potential consolidation.

Silver (XAG/USD) is heading higher on Thursday, favoured by a weaker US Dollar, as market concerns about the US economic outlook and higher hopes of Fed rate cuts are weighing heavily on the US Dollar.

The US Dollar Index, which measures the Greenback against a basket of the most traded currencies, has depreciated more than 2% from Friday's highs, and is testing the 98.00 round level, ahead of US Jobless claims data and with markets expecting Trump to appoint loyalist doves to cover the Federal Reserve's vacancies.

Technical analysis: Resistance at $37.30 might hold bulls

The technical picture points to an immediate bullish trend, but the 4-hour RSI has reached overbought levels just as price action reached the $38.30 resistance level (July 28 and 29 highs), which is coincident with the 98.00 round level in the US Dollar Index.

Silver has rallied more than 5% from Friday's lows, and it might need additional stimulus to extend gains further. The US Jobless claims report might be the catalyst. Further up, the next targets are the July 22 and 24 lows, at $38.75 and the July 24 high, at $39.20.

On the flipside, a reversal below intra-day lows at $36.85 might find support at the August 5 low of $37.30 ahead of Friday's low of $36.21