XAG/USD eyes to regain $27.00 after the recent pump-and-dump

Silver consolidates Tuesday’s loses, the biggest in six month, while bouncing off weekly bottom.
Risk gains in Asia amid chatters over US stimulus talks, receding retail rush.
DXY jumped to two-month high before easing off-late.
China Caixin Services PMI, US aid package talks can entertain traders ahead of the key US data.

Silver picks up bids near $26.92, up 1.86% intraday, during the initial hour of Tokyo open on Wednesday. The white metal dropped the most since August the previous day while reversing Monday’s rally on market frenzy. Also favoring the commodity sellers was the US dollar’s gains and a light calendar.

Although US Treasury Secretary Janet Yellen quotes Congressional Budget Office (CBO) forecasts while stating the desperate need for the fiscal stimulus, policymakers in the Senate keep haggling over the much-awaited relief, which in turn probes the greenback bulls. That said, the US dollar index (DXY) rose to the highest since early December on Tuesday after US President Joe Biden said talks with Republicans, over the aid package, were “substantive and productive”. Also backing the greenback buyers were Democratic push for the budget resolution that will enable them to pass the relief package without opposition’s support.

Read: Market focussed back on the size of the Biden fiscal bonanza

Other than the domestic play, the USD also gained after European GDP marked another dismal data from the bloc and drove traders towards a comparatively better option, for now.

It should be noted that a reduction in the retail rush added strength to the US dollar. However, comments from Reuters, suggesting the US mint’s inability to meet the surging demand for gold and silver coins in 2020 and through January favor the commodity buyers. “Sales of U.S. gold bullion coins rose 258% in 2020 while silver coin demand was up 28%, the U.S. Mint said Tuesday. Heavy buying has continued in 2021, it said, squeezing supplies, which had already been tight as the coronavirus affected production,” said the news.

Amid these plays, S&P 500 Futures rise 0.35% whereas stocks in Japan and Australia stay bid but those from New Zealand await fresh clues despite upbeat employment data.

Although the Asian economic calendar doesn’t offer any major data/events, except for China Caixin Services PMI, expected to ease to 51.1 from 56.3, the US session will entertain markets will the ADP Employment Change and ISM Services PMI for January.

Read: ADP Employment Change January Preview: A return to hiring?

Technical analysis

10-day SMA offers immediate support around $26.30, which in turn directs silver run-up towards January’s high of $27.92.