The dollar strengthened more than 0.30% today. Currency found strong support in the wake of stubbornly high U.S. inflation data , released yesterday. Amid talk on interest rates from Federal Reserve officials.
The U.S. dollar index, which gauges the currency against its peers, was up 0.32% to 103.60 after closing roughly flat yesterday.
After the strength in greenback, Bullion prices tumbled significantly. Silver Future plunged more than 1.30% today. MCX Silver Future slipped below 65200 and is trading at 65338. While Comex Silver Future slipped below $21.4350, and traded at $21.54.
U.S. consumer price index (CPI) inflation accelerated month-on-month in January, rising 0.5% as expected, due in part to higher rental and food costs.
Year-on-year, prices rose 6.4%. That was down from 6.5% in December but above economists’ expectations of 6.2%.
The dollar climbed against most major currencies, with the euro down 0.11% to $1.073. The euro touched a 10-month high of $1.103 on Feb. 2 but has since slipped.
Sterling dropped 0.68% to $1.209 after British inflation cooled more than expected in January to 10.1%, alleviating some of the pressure on the Bank of England to keep hiking rates.
Expectations of higher interest rates tend to make a country’s assets look more attractive, boosting their currencies, and vice versa.
Technical
Silver Future posted a 1.50% intraday fall since morning today. It has been under pressure since 3 February 2023.
On the above daily chart, after breaching the crucial support of 67355, Silver future tested 65184 recent low. Now it’s trading near to important support 65050. Which coincided with 100 SMA .
A break below 65050 only would extend the recent losses, and Silver Future could test next support 64500-64000. Else, short term pullback could expect from 65100-65080 before next downside move. Fresh selling is expect to take place on the rise around 65700-66000. Or else below 65050. As if Silver Future breaks 65050, then it will be quite ready to test a new crunch for the downside level 64500-63800.
Alternatively, on the upside massive resistance is seen at 66220. If Silver Future breaks it then sentiment may turn positive. Silver prices may rebound towards next resistance 66800-67250 very soon.
Overall sentiment could remain fragile. Today, US economic data will extend clutter for the Bullion and Currency market. Pound, Euro is already trading on weak nodes following the strength in the dollar.
If today’s data will stand favorable for the dollar, then bullions prices face a new crunch thereafter.