Silver Price Forecast: XAG/USD dips below $38.30 as the Dollar picks up

Silver fails to break above $38.75 highs and retreats below $38.20.
The US Dollar's upside attempts remain limited amid hopes of immediate Fed cuts.

XAG/USD is showing a bearish divergence that hints to a deeper reversal


Silver (XAG/USD) accelerates its reversal from the 38.75 highs, reaching session lows below 38.30 and turning negative on daily charts. The US Dollar Index has extended its recovery, although it remains unable to put a significant distance from the two-week lows hit earlier this week.

Recent US data and investors' hopes that the Fed will cut rates in September are acting as headwinds for any US recovery attempt. These views were endorsed further by US Treasury Secretary Scott Bessent, who hinted at a 50 bps cut next month, following the moderate US inflation data released on Tuesday.

Today the market is looking to the US Weekly Jobless Claims, which are expected to confirm the softening momentum of the US labour market, with a 2,000 increase to 228,000 new claims. These figures will be contrasted with July's US PPI reading, which is expected to show hotter inflationary pressures.

Technical Analysis: XAG/USD shows a bearish divergence
 

From a technical perspective, the impulsive reversal from the $38.75 suggests mounting bearish pressure. Technical indicators remain positive, but the bearish divergence observed in the 4-hour RSI points to a deeper correction.

The pair is clinging to a previous resistance area at the $38.30 area. Below here, the next targets are the August 12 low, at $37,60, and the August 5 low, at $37.30.To the upside, immediate resistance is at the mentioned intra-day high, at $38.75 ahead of the $39.20 intra-day level and the July 23 high, at 39.55.