EURUSD formed lower highs connected by a falling trend line on its 1-hour chart. Price is pulling up to this resistance level that might still keep gains in check.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that resistance is more likely to hold than to break. The 100 SMA also lines up with the trend line, a former support area, and the 61.8% Fibonacci retracement level at 1.1820.

If this holds as a ceiling, EURUSD could slide back to the swing low at 1.1768 or lower. Stochastic looks ready to turn lower from the overbought zone, reflecting a return in selling pressure.

RSI, on the other hand, has room to climb before reaching the overbought zone to reflect exhaustion among buyers. This suggests that a larger correction might still be possible.

The upcoming US CPI release might impact the dollar’s price action in the next few hours, as price pressures would likely indicate whether or not the Fed could push for an early taper.

Stronger than expected results could spur speculations that the central bank could attempt to taper next month or in November while weak data could push expectations to December. Analysts are expecting to see a 0.4% uptick in the headline figure and another 0.3% reading for the core CPI.

Note that the ECB barely gave any timeline on its taper plans, so the euro could be on weaker footing if the US central bank shows an inclination to reduce stimulus ahead of some of its peers.

Later in the week, the US is scheduled to print retail sales data, and this could also impact Fed tapering expectations. Note that jobs growth has been weak in the past month, so consumer spending likely took a hit.