The AUD/USD pair attempted to gain ground at the start of the Friday session but ultimately fell short, retreating back below the 0.67 level once more. The current market conditions are characterized by significant volatility and unpredictability. AUD/USD tried to push higher early in the session; however, it faltered and slipped below the 0.67 handle again. The pair has faced some challenges lately, primarily due to the lack of strong directional momentum at this time.
Overall, I believe the AUD/USD market will remain sensitive to developments from the Reserve Bank of Australia, particularly given the likelihood of an imminent rate increase. At the same time, the Federal Reserve in the United States has shown reluctance regarding its rate-cutting cycle, and as this situation persists, it likely provides modest underlying support for the US dollar, limiting upside in AUD/USD.
Nonetheless, my recent use of AUD/USD has primarily been as a vehicle to capitalize on periods of US dollar weakness. In essence, when the US dollar is declining broadly, my preference shifts toward the Australian dollar. This preference is supported not only by the RBA’s policy stance but also by the resurgence of Chinese manufacturing, which tends to benefit the Australian economy and, by extension.
The 0.6750 level above represents a significant resistance zone for AUD/USD that may prove difficult to overcome. However, a daily close above this level would open the door for a move toward the 0.69 area. Conversely, a break below the 50-day EMA near 0.6633 could signal trouble for the Aussie, potentially leading to broader US dollar strength against most currencies. While this may appear to be a straightforward short setup, better downside opportunities may exist against the British pound or the euro. Overall, AUD/USD maintains a constructive bias, though it remains hesitant to commit to a decisive move.