AUD/JPY drops to lowest level since November 2016

• The AUD/JPY, a risk barometer, continues to slide, signaling the risk sentiment is worsening on escalating trade tensions.
• The 14-day relative strength index (RSI) shows there is room for a further drop in the JPY cross.

The AUD/JPY pair fell to 79.06 a few minutes ago - the lowest level since November 2016 and was last seen trading at 79.22.

The sell-off is likely associated with the escalating US-China trade tensions and could be considered a sign of impending risk aversion in the global equities as the JPY cross is widely considered a risk barometer.

More importantly, the 14-day RSI is holding a few points above 30.00, meaning the pair could extend the decline further, albeit after a brief bear breather as the RSI on the hourly chart is reporting oversold conditions.

That said, a strong corrective rally could be seen if the US delays the fresh round of tariffs on Chinese goods.

AUD/JPY Technical Levels

Resistance: 79.52 (Sep. 3 low), 79.70 (Aug. 15 low), 80.00 (psychological resistance)

Support: 79.26 (76.4% Fib R of 72.44/90.30), 79.00 (psychological support), 78.18 (Apr. 2016 low)