EURJPY is trending higher inside a rising channel on its 4-hour time frame. Price is already testing the resistance and could be due for a pullback to nearby support zones.

The Fibonacci retracement tool shows where buyers might be waiting to hop in at better prices. The 61.8% level is closest to the channel support around the 137.50 minor psychological mark while the 50% Fib lines up with the 138.00 handle.

A shallow correction could already find buyers at the 38.2% Fib that lines up with the mid-channel area of interest around 139.00. If any of the Fib levels are able to keep losses in check, EURJPY could resume the climb to the swing high near 140.00 or the channel top closer to 141.50.

The 100 SMA is below the 200 SMA, though, so the path of least resistance is to the downside. This might simply mean that a correction is in order, especially since the gap between the moving averages is narrowing to reflect weakening bearish pressure.

Stochastic has been indicating overbought conditions for quite some time, suggesting that the channel top is likely to hold for the time being. RSI is also in the overbought region and has plenty of room to move south before reflecting exhaustion among sellers.

Earlier in the week, the eurozone printed stronger than expected inflation figures, keeping euro bulls hopeful that the ECB would hike interest rates once more.

There have been no major reports from Japan, but traders might be buying up the safe-haven yen as risk-off flows pick up. After all, investors remain wary of a global recession, especially since China has announced another set of lockdowns.

Also, the NFP release might have an indirect impact on EURJPY as it tends to influence overall market sentiment. Strong data could bolster expectations for higher Fed interest rates, which might dampen investors’ appetite for risk.