Silver Price Forecast: XAG/USD rebounds as Fed remains uncertain about interest rate outlook

• Silver price attempts recovery while the downside bias remains solid due to the resilient US Dollar.
• Fed Waller said more economic data is needed to say that the Fed is done raising rates.
• Silver price delivers a mean-reversion move to near the 20-EMA around $23.80.

Silver price (XAG/USD) discovers buying interest near $23.50 in the early New York session. The white metal attempts recovery after a sharp sell-off, which was inspired by the resilient US Dollar. The broader bias remains negative as the US Dollar Index (DXY) is expected to extend its upside journey.

S&P500 opens on a negative note as the market mood remains cautious due to the deepening risks of the global recession. The US Dollar capitalizes on downbeat global data, especially on weak China’s Services PMI. The economic data for August dropped significantly to 51.8 vs. the former release of 54.1. China’s service sector faces the pressure of deflation risks due to the deteriorating demand environment.

The US Dollar Index faces profit-booking after printing a fresh five-month high near 104.80 as Federal Reserve (Fed) Governor Christopher Waller remains uncertain about the interest rate outlook. Fed Governor told CNBC on Tuesday that the economic data will guide whether the Fed needs to lift rates again and added that he would need more data to say the Fed is done raising rates, per Reuters. He further added one more interest rate hike unlikely to send the economy into a recession.

About the labor market, the Fed Governor cited that the higher Unemployment Rate was not surprising. The job market has started softening but is still very strong.

Silver technical analysis

Silver price delivers a mean-reversion move to near the 20-period Exponential Moving Average (EMA) around $23.80. The asset attempts recovery after testing the 50% Fibonacci retracement (plotted from August 15 low at $22.23 to August 30 high at $25.02) at $23.62.

The Relative Strength Index (RSI) climbs into the 40.00-60.00 range from the bearish range of 20.00-40.00, which indicates that the bearish impulse has lost strength.

Silver hourly chart