AUD/JPY drops below 50-DMA, risk-off ahead?

AUD/JPY cross fell below 50-DMA level of 78.09 levels indicating the risk-off trading could gather pace as the day progresses.

Sits above 78.00 handle

The cross currently trades just above 78.00 handle. AUD/JPY is widely considered as a regional risk barometer; given the AUD is a risk currency, while the Japanese Yen is a safe haven. The drop in the AUD/JPY thus suggests trouble times ahead for the risk assets.

However, the drop in the cross is largely due to the weakness in the AUD/USD pair. Moreover, the Dollar-Yen is flat, thus the sell-off in the cross may not be a an early indication of the risk-off.

AUD/JPY Technical Levels

A break below 78.00 (zero figure) could yield 77.59 (5-DMA), under which the prices could target 77.00 levels. On the other hand, a breach of 78.09 (50-DMA) would open doors for 78.68 (previous day’s high). A violation there could yield 79.00 levels.