AUD/JPY: heavy loser, but now overdone?

Currently, AUD/JPY is trading at 85.60, down -0.37% on the day, having posted a daily high at 85.96 and low at 85.50.

EUR/JPY intermarket: the cross stopped in its tracks on Wall Street's sell-off

AUD/JPY has dropped like a stone overnight in a risk-off environment as investors reverse the reflation and Trump trade. Markets are concerned that Trump will not deliver on the fiscal policy that was priced in on his victory last year. 

Trump's first 100 days of office so far have not been a breeze and there are doubts he will deliver on the sweeping tax breaks for both corporates and individuals while a repeal of Obamacare looks like a tall order, delaying the process of implementation of other policies. Subsequently, stocks sold off heavily overnight, US yields dropped and a flight to the yen ensued (USD/JPY broke below 112 handle) while the Aussie suffered a risk-off exodus resulting the cross to fall 150 pips.  

AUD/JPY levels

AUD/JPY's drop has shattered the first support of the 2017 bull trend's at 85.85 and the next level of support within the uptrend is at 85.20. A break of 84.00 opens 83.80 with 82.57 as next major downside target. The upside has the 50-d sma located at 86.54. However, technical readings are oversold and USD/JPY is down to a look in at the 111.39/36 weekly cloud top and 38.2% fib of 99.54-118.66.