AUD/JPY eyes sub-83.00 levels, Tokyo stocks fall, risk-off ahead?

AUD/JPY is dangerously close to breaching the key psychological support of 83.00 levels with Japanese stocks trading weak following a lack lustre action on the Wall Street.

The cross failed to take out the key resistance level of 83.74 on Monday as the drop in the 10-year treasury yield from 2.395% to 2.35% helped the Japanese Yen retake its losses.

Risk aversion ahead?

The weakness in the AUD/JPY cross is generally an advance signal of the risk aversion in the financial markets across the globe. As of now the losses in the pair are moderate. Furthermore, the 0.35% drop in the Nikkei could be more due to the already strong Yen.

Nevertheless, caution is warranted as the treasury yields are on the retreat, while gold is on the front foot. Thus, the drop in the AUD/JPY this Tuesday morning in Asia could be at least in part due to risk-off mood.

AUD/JPY Technical Levels

The session low stands at 83.01 and the pair was last seen trading around 83.10. A break below 83.00 (zero figure) would open up downside towards 82.60 (Nov 15 high) and 81.93 (200-DMA). On the higher side, breach of resistance at 83.40 (5-DMA) could yield a rally to 83.82 (Mar 28 low) and 84.07 (10-DMA).