Talks are understood to be progressing well, with Fury vs Joshua planned for December 3 in Cardiff.
Joyce concedes that the bout is "more in favour of Fury" but Joshua cannot be written off.
"I think he improved a lot against Usyk from the last fight and I think he can maybe do something but it will be a tough test.
"It has been presented to him and it is a good option and maybe he might have benefitted for his morale to have a couple of easier fights to get his confidence back. But he doesn't want to do that.
"It is exciting and it is what people want to see. Joshua is dangerous and he has power in both hands.
"Maybe if he presses the fight more and comes out better offensively he could do it but it's certainly going to be an exciting fight."
Joyce was speaking ahead of his fight against ex-world champion Joseph Parker on September 24 at the AO Arena in Manchester.
This event is being shown on BT Sport Box Office in the United Kingdom.
The winner of this heavyweight clash will become the WBO mandatory for Oleksandr Usyk's world title.
Joyce has proclaimed that he wants to "finish" Parker as the Brit is eyeing his 14th knockout victory in his 15th professional bout:
"I think watching the [Derek] Chisora fight he is quite powerful and has got a good chin as well," Joyce added.
"He has good skills and a boxing brain with his footwork so it is going to be a tough test. So I am prepared and I am not overlooking him and it is going to be a great fight.
"But I don't get paid for overtime. I like to be in exciting fights and give some entertainment and why do twelve rounds that is long.
"I would like to just finish him off and I want another KO for my record."