AUD/JPY trims gains below 87.50, risk-on waning?

The cross in AUD/JPY trimmed gains and fell back below 87.50 barrier, as risk-on trades appear to have eased a bit amid renewed weakness seen in oil prices

AUD/JPY back at 5-DMA of 86.36

The cross is seen extending its retreat from two-day tops of 86.63 in the European session, and now looks to test 86.00 levels ahead of the US open, as risk appetite seems to be waning amid stalled rally in the European stocks and tumbling oil prices.

As a result, the AUD/USD pair extends losses and meanders near daily lows of 0.7869, while the USD/JPY pair eases-off 109.80 levels to trade near 109.68, keeping the gains limited in the risk barometer - AUD/JPY.

Also, lingering geopolitical tensions between the US and North Korea continue to remain a big risk, which could keep any recovery short-lived. Focus now shifts towards RBA’s monetary policy meeting minutes and US retail sales data due on the cards tomorrow for fresh trading opportunities.

Technical Levels

Higher side: 86.87/98 (50 & 10-DMA), 87.11 (Aug 10 high), 87.66 (20-DMA)

Lower side: 86.00 (round number), 85.27 (200-DMA), 85.04 (100-DMA)