Forex News
Here is a rundown of latest headlines surrounding the crisis in the Middle East as the United States (US) and Israel’s war against Iran enters the fourth week:
- US President Donald Trump said on Saturday that they will “obliterate” Iran’s power plants, starting with the biggest one, if they refuse to open the Strait of Hormuz within 48 hours.
- Iran warned that it will retaliate and target all US-linked energy infrastructure in the Middle East if the US attacks its power plants. In a statement published on Sunday, Iran’s Revolutionary Guards said that the Strait of Hormuz will be completely closed if the US executes threats against its energy facilities, adding that companies with US shares will be 'completely destroyed.'
- Iran’s representative to the United Nations’ maritime agency stated that the Strait of Hormuz remains open to all shipping, excluding vessels linked to its enemies.
- In a joint statement released on Saturday, foreign ministers of the Group of Seven (G7) countries called for “immediate and unconditional cessation of all attacks by Iran,” and reiterated that the G7 stands ready to take necessary steps to support the global energy supply.
- Iran fired long-range missiles for the first time since the beginning of the conflict and hit the southern Israeli town of Dimona, located near military bases and Israel’s Negev Nuclear Research Center. The International Atomic Energy Agency said it had received no indication of damage to the nuclear facility. The BBC reported that more than 160 people have been injured - some seriously - in the attack.
- Silver plunges below 100-day SMA, accelerating selloff toward six-week lows.
- RSI dives toward oversold territory, signaling strong bearish momentum persists.
- Recovery requires reclaiming $70.00 and 100-day SMA to stabilize prices.
Silver price (XAG/USD) retreats late in the North American session, down by over 6.80% in the day, poised to finish the week with losses of more than 15.70%, posting its second-largest weekly loss since the one that ended down 17.39% on January 30. At the time of writing, XAG/USD trades at $67.89.
XAG/USD Price Forecast: Technical Outlook
Although turned bearish this week, Silver remains upward biased as long as the bulls keep spot prices above the February 6 swing low of $64.10. In the short term, XAG/USD turned negative after falling below the 100-day SMA at $72.55, which exacerbated a drop below $70.00, towards a six-week low of $65.52.
Nevertheless, in the medium term, the market structure has respected the successive series of higher lows and higher highs, keeping the bulls in the driver’s seat.
Momentum notably favours sellers, as evidenced by the Relative Strength Index (RSI), which pierced its neutral level and fell sharply toward oversold territory. A drop below the RSI’s 30 level and a quick jump back above it could open the door to form a bottom, IF the RSI consolidates steadily, registering higher peaks and troughs.
For a bull market recovery, XAG/USD needs to reclaim $70.00 and the 100-day SMA. Once surpassed, the next stop is the cycle low-turned-resistance at $77.98, the March 3 daily low.
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
A Reuters poll revealed that the Bank of Mexico, also known as Banxico, is expected to keep interest rates steady at 7% at the March 26 meeting amid concerns about the Middle East war.
If Banxico keeps rates unchanged, it would be the second consecutive time the central bank has opted for a wait-and-see approach, after reducing rates 12 times since the easing cycle began.
The survey revealed that 16 of 28 economists expect Mexico's main reference rate to remain unchanged, while a minority of participants — including analysts at Goldman Sachs and JPMorgan — project a resumption of Banxico's easing cycle, even though the central bank's governing council raised inflation expectations.
Eleven of the respondents expect a 25-basis-point reduction to 6.75%, including the already mentioned Bank of America and Barclays, alongside one local analyst who projects a 25-basis-point rate hike to 7.25%.
(This story was corrected on March 20 at 21:02 GMT to say that Eleven of the respondents expect a 25 basis points reduction to 6.75%, not Eleven of the respondents expect a 25 basis points reduction to 6.25%.)
Banxico FAQs
The Bank of Mexico, also known as Banxico, is the country’s central bank. Its mission is to preserve the value of Mexico’s currency, the Mexican Peso (MXN), and to set the monetary policy. To this end, its main objective is to maintain low and stable inflation within target levels – at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%.
The main tool of the Banxico to guide monetary policy is by setting interest rates. When inflation is above target, the bank will attempt to tame it by raising rates, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN. The rate differential with the USD, or how the Banxico is expected to set interest rates compared with the US Federal Reserve (Fed), is a key factor.
Banxico meets eight times a year, and its monetary policy is greatly influenced by decisions of the US Federal Reserve (Fed). Therefore, the central bank’s decision-making committee usually gathers a week after the Fed. In doing so, Banxico reacts and sometimes anticipates monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before the Fed raised rates, Banxico did it first in an attempt to diminish the chances of a substantial depreciation of the Mexican Peso (MXN) and to prevent capital outflows that could destabilize the country.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
