The National Australia Bank (NAB) Business Confidence Index came in higher than the market expected but could still see the lower AUDUSD currency pair trend.
Business confidence rose by 2 points in July, placing it firmly in positive territory as business conditions continued to show resilience in a challenging environment. The monthly report also showed that critical employment, demand and profitability metrics held steady above median levels. The retail sector remains topical but also reported strong current conditions, while a sharp increase in the labour cost of 3.7% also took effect in July.
Looking toward the US, the Dollar should remain topical this week, with the pending US Inflation data set to be released this Thursday. It is widely expected that the US inflation data could come in hotter than expected, with sticky Core inflation being the focal point which could add to some Dollar strength this week if the data does not impress.
Technical
With the positive NAB Business confidence report released this morning, strength is returning to the Aussie Dollar (AUD). The price action on the AUDUSD currency pair is rolling over and pressing lower to the 0.65137 support level.
If this significant support level does not hold, we could see lower levels targeted on the currency pair with the 0.64565 support level (red line) firmly in focus.
The 50-day SAM (blue line) also supports lower prices and will be watched closely for being a resistance to price if the currency pair pushes higher. The first overhead resistance is at the 0.66040 price level, which coincides with the 23.60% Fibonacci retracement level.
Summary
Key data points are still to be released this week, with US CPI data being the focal point for the US Dollar. Major support levels to watch are 0.65137 and 0.64565. if the currency pair gains momentum to the upside, overhead resistance levels are the 50-day SMA and the 23.60% Fibonacci retracement level.
Sources: Bloomberg, National Australia Bank (NAB), TradingView.
Piece Written by Barry Dumas, Head of Client Education ,
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