• AUD/JPY extends its downside near the 93.80 area on Wednesday.
• BoJ policymaker stated that Japan is in a position where it is critical to maintain an easy policy.
• AUD/JPY trades within a descending trend channel on the four-hour chart.
• The immediate level is seen at 95.50; the initial support level is located at 93.30.

The AUD/JPY cross trades in negative territory for the second consecutive day heading into the early European trading hours on Wednesday. The cross currently trades around 93.80, losing 1.03% for the day. The Aussie faces some follow-through selling following the Reserve Bank of Australia (RBA) interest rate decision and Bank of Japan (BoJ) Meeting Minutes.

The RBA board members decided to maintain the interest rate unchanged at 4.10% at Tuesday's August monetary policy meeting. On the other hand, the BoJ surprised financial markets by making its yield curve control (YCC) more flexible. The central bank will allow the 10-year yield to move above the cap as long as it stays below 1.0% rather than being capped at 0.5%. Additionally, BoJ Deputy Governor Shinichi Uchida stated early Wednesday that Japan is in a position where it is critical to maintain an easy policy.

According to the four-hour chart, AUD/JPY trades within a descending trend channel line from the middle of June. That said, the path of least resistance for the AUD/JPY is to the downside as the cross holds below the 50- and 100-hour Exponential Moving Averages (EMAs). Additionally, the Relative Strength Index (RSI) holds bearish territory, supporting the sellers for now.

The immediate level is seen at 95.50, indicating the upper boundary of a descending trend channel and a high of August 1. The additional upside filter to watch is 96.85 (High of July 4), and 97.60 (YTD high).

On the flip side, the initial support level is located at 93.30 (Low of July 12). The next contention appears at 92.60 (Low of July 28) en route to 92.40 (the lower limit of a descending trend channel). A break below the latter will see a drop to 92.15 (Low of June 6).

AUD/JPY four-hour chart