AUD/USD Forecast: Market Awaits Clear Direction

• The Australian dollar tried to rally to kick off the Friday session but failed and ended up falling back below the 0.67 level yet again.
• This remains a very noisy and choppy market at the moment.

The Australian dollar tried to rally to kick off the Friday session, but has failed and ended up falling back below the 0.67 level yet again. This is a pair that has been a bit difficult recently, mainly because there's no real momentum in either direction at the moment.

Overall, though, I think this is a market that will continue to pay close attention to the Reserve Bank of Australia and the fact that it is likely to raise rates sooner rather than later. The United States, of course, has the Federal Reserve that has been a bit stubborn with its rate-cutting cycle, and as long as that's the case, I think it does put a little bit of a bid into the US dollar.

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Nonetheless, the way I've been using the Australian dollar more or less over the last several weeks has been as a way to play US dollar weakness. In other words, if the US dollar is falling everywhere, then I prefer to be in the Aussie dollar, as not only is it backed up by the RBA, but it's also backed up by Chinese manufacturing picking up.

Major Resistance Barrier

The 0.6750 level above is a major resistance barrier that I think will be difficult to get above, but if and when we get a daily close above that level, then it opens up the Australian dollar to go to the 0.69 level.

If we were to break down below the 50-day EMA at the 0.6633 level, then I think the Aussie could be in a little bit of trouble. In that environment, we would more likely than not see the US dollar strengthening against almost everything.

While it would be an obvious short in this market, the reality is that you probably get more traction against the British pound or even the Euro in that environment. Ultimately, this looks bullish, but hesitant to make its move.

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