AUD/USD losses momentum and retreats toward 0.7200

The AUD/SUD pair rose sharply during the Asian session after the Reserve Bank of Australia (RBA) meeting but then, lost strength and pulled back, trimming gains. It is still in positive ground for the day, but far from the highs and looking weak ahead of Wednesday. 

The RBA as expected left the cash rate at 1.5%, but its projections sounded less dovish than expected and boosted the Aussie across the board. Now some analysts expect no move during 2019 and even see a potential rate cut. 

According to experts at TDS, consensus expects the 1.5% cash rate to prevail through to mid-2020. “However, after the CPI hurdle last week (core at 1¾ y as widely expected) and a 'gradual but on target' RBA today, we look to Q4 wages on February 20 to assess the timing of the first hike (November to 1.75% is our base case)”, they warned. 

Rabobank analysts see some risks that “the RBA could still cut rates this year on the back of both domestic and overseas risks” and also that AUD/USD “will trend towards the 0.68 area on a 12 mth view.”

Regarding the US dollar, today the greenback rose across the board during the US session particularly versus European currencies despite weaker-than-expected US data. In a few hours, US President Trump will deliver the State of the Union address. Around the same time Philip Lowe, RBA governor is also due to speak.

AUD/USD Short-term levels

The pair is trading close the support seen around 0.7225, below that level the next might be seen at 0.7200 followed by 0.7175. To the upside, resistance could be located at 0.7250, 0.7275 and 0.7300.