Spot silver prices hovered around $42.20 during the European session on Friday, September 19th. The previous day's rally continued today, reaching an intraday high near $42.40, but the upward trend subsequently slowed. The subtle resonance between interest rates and the US dollar, as well as the economic cycle re-pricing driven by US employment data, dominated silver prices this week.

Fundamentals:

At this week's meeting, the Federal Reserve lowered its policy rate by 25 basis points to a range of 4.00%-4.25%, and its dot plot hinted at two more rate cuts this year. This rate cut has a direct duration benefit on the pricing of "non-yielding assets": discount rates fall, carrying costs decrease, and theoretically support silver. Chairman Powell emphasized the slowdown in labor demand after the meeting, stating, "The balance of risks has shifted, and I can no longer describe the labor market as strong."

Meanwhile, the US dollar index (DXY) continued its three-day rebound, currently hovering around 97.50. Initial jobless claims for the latest week came in at 231,000, below the market expectation of 240,000 and lower than the previous week's 264,000. Continuing claims fell to 1,920,000, below the consensus estimate of 1,950,000 and revised down from 1,927,000 the previous week. These marginally positive employment readings support the US dollar in the short term, thus curbing the upward momentum of precious metals. Looking ahead to the rest of the week, the market will monitor San Francisco Fed President Mary Daly's speech early Saturday morning to further confirm whether the dot plot still indicates "two more cuts" for the year. If guidance maintains an accommodative path and lacks a significantly more hawkish tone, yields and the US dollar may struggle to maintain sustained support, which is bullish for silver's medium-term pricing.

Technical aspects:

The daily chart shows prices climbing along an ascending channel since the June low. The Bollinger Band's middle line is at 40.180, with the upper band at 43.516 and the lower band at 36.844. Prices remain above the middle band, suggesting a continuation of the bullish trend. The previous high of 42.950 and the upper band at 43.516 together form the first and second resistance areas of this upward trend. A breakout and sustained support above this level would signal an acceleration of the upward trend. Conversely, repeated resistance near 42.950 would indicate a potential retest of the middle band.



The RSI (14) reading is around 65.867, which is in the "strong but not extreme" range, consistent with the characteristics of "climbing in a strong oscillation". Combining various indicators, the core of the technical analysis lies in: (1) Confirmation of a breakthrough in the 42.950-43.516 range; (2) If the upward attack fails, the Bollinger middle band of 40.180 will become a watershed between bulls and bears; (3) If it falls below the middle band, the static support below is at 39.786 and 37.525, and further at 35.264.

In terms of form, if a long upper shadow line and shrinking volume combination appears in the future, we need to be wary of a short-term weakening like a shooting star line; and if it rises during the session and effectively stands above 42.950 with the closing price, and the upper shadow line is continuously engulfed, then there is hope for a breakthrough in volume.

Market outlook:

(Short-term scenario) If Mary Daly's speech continues to anchor the dot plot and lacks hawkish "beat-forward" signals, silver could retest the resistance levels of 42.950 and 43.516. If the MACD-histogram re-expands and the RSI stabilizes in the 60-70 range, the probability of an upside breakout increases, with resistance at 44 at the target. Conversely, if the speech triggers a temporary rebound in yields and the US dollar, prices could retrace to test 42.047 and 40.180. If this breaks below, the next static support level is 39.786-37.525.

Regarding risks, we should focus on three key factors: first, the Fed's "front-loading" of its communication and the path of repricing; second, the consistency of employment data, rather than single-week noise; and third, the persistence of the US dollar index above 97.50. If these three factors resonate, silver volatility could rise significantly, increasing the probability of false breakouts and large-volume pullbacks.