Silver Price Forecast: XAG/USD plunges to near $28 ahead of busy US data week

• Silver price falls sharply to near $28.20 as the US Dollar rises further.
• Traders remain split over the Fed’s potential rate cut size in the September meeting.
• Investors await the US Manufacturing PMI data for August.

Silver price (XAG/USD) extends its losing spree for the third trading session on Tuesday. The white metal declines to near $28.20 as the US Dollar (USD) rises further amid uncertainty ahead of a slew of United States (US) economic data this week.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises toward fresh two-week high of 102.00.

Investors keenly await the US Nonfarm Payrolls (NFP) data for August, releasing on Friday, as it will influence market speculation for the likely size of interest rate cut by the Federal Reserve (Fed) in the September meeting.

The Fed is widely anticipated to start reducing interest rates this week but traders are divided on whether the central bank will kick-off the policy-easing cycle gradually or aggressively. Apart from the US NFP report, investors will also focus on the JOLTS Job Openings data for July and the ADP Employment Change data for August, which will be published on Wednesday and Thursday, respectively, that will provide fresh cues on current labor market status.

In today’s North American session, investors will focus on the US ISM Manufacturing PMI data for August, which will be published at 14:00 GMT. The US Manufacturing PMI is estimated to have improved to 47.5 from July’s reading of 46.8 but a figure below 50.0 is itself considered as contraction.

Silver technical analysis

Silver price weakens after a breakdown of the Head and Shoulder chart pattern on a four-hour timeframe, whose neckline is plotted near $28.80. Declining 20-period Exponential Moving Average (EMA) near $28.80 suggests that the near-term trend is bearish.

The 14-period Relative Strength Index (RSI) shifts into the bearish range of 20.00-40.00, suggesting a strong bearish momentum.

Silver four-hour chart