EURJPY is trending lower inside a falling channel on the 1-hour time frame and is testing support. A bounce off this level could lead to a pullback to nearby resistance levels.

The Fibonacci retracement tool shows where more sellers might be waiting. The 38.2% Fib is just above the mid-channel area of interest around 123.75 then the 61.8% level lines up with the channel top around the 124.00 major psychological mark.

The 100 SMA dynamic inflection point coincides with the 50% Fib but is still above the 200 SMA to suggest that there is some bullish pressure left. Then again, the gap between the indicators is narrowing to signal weakening bullish momentum and a potential bearish crossover. If that happens, the Fib levels could keep gains in check and sellers could take EURJPY back to the swing low or the channel bottom.

Stochastic is pulling up from the oversold region to signal that buyers are taking over while sellers take a break. RSI is heading south but is also nearing the oversold region to reflect exhaustion among bears.

The euro has been under downside pressure recently on account of the growing number of coronavirus cases in Germany and France. This prompted another set of lockdown measures that would likely hurt business and consumer activity, likely keeping the ECB in easing mode.

Meanwhile, the yen has gained some support on safe-haven flows despite optimism regarding vaccine developments. The downbeat US retail sales report is said to have brought risk aversion back in the markets as traders are wary that the slowdown could last much longer.

There are no major reports due from Japan or the eurozone in the coming days, although the final CPI readings from the region might be worth keeping tabs on, along with Brexit negotiations.