Euro is trading high against greenback and the pair EUR/USD is hovering around 1.1450 level in the early Asian session.  On Friday, the major currency pair dropped to a fresh 16-month low 1.1432 before bouncing. The bounce of the Euro can be related to the cautious market mood amid the downbeat Michigan Consumer Sentiment.

The dollar was down on Monday morning in Asia.  The mixed concerns about the US stimulus and inflation along with the Fed rate hike after the f Friday’s surprisingly downbeat Michigan Consumer Sentiment data which slumped to a 10-year low; seem to create the cautiously optimistic market mood which pulled the dollar down.

Elsewhere, latest comments from the Federal Reserve Bank of Minneapolis President Neel Kashkari also underpinned the cautious market mood. Minneapolis Federal Reserve Bank President Neel Kashkari said on Sunday he expects higher inflation continuing over the next few months but warned that the U.S. central bank should not overreact to elevated inflation as it is likely to be temporary.

He said “The math suggests we’re probably going to see somewhat higher readings over the next few months before they likely start to taper off.”

Also Fed rate hike woes remain elevated which ignores the policymakers transitory outlook for inflation, as inflation fears and consumer confidence data portray the reflation fears.

On the other hand, On Friday, Governing Council member of ECB Gediminas Shimkus said that inflation will fall below target in 2023 by adding that it is not in line with the forward guidance conditions. Whereas His fellow Official at the ECB Olli Rehn said the same day that the relief on supply bottleneck may not arrive until toward the end of 2022.This mixed comments from the ECB policy makers also helped the Euro.

Investors now await U.S. retail sales data, which will be released on Tuesday. National Australia Bank (OTC:NABZY) head of FX strategy Ray Attrill said that “It will be important to watch what still cashed-up U.S. consumers do rather than what they say,” considering readings of sentiment were at odds with actual spending during the summer.”

EUR/USD 4 Hour Chart:

Support: 1.1429 (S1), 1.1416 (S2), 1.1400 (S3).

Resistance: 1.1458 (R1), 1.1474 (R2), 1.1487 (R3).

Amidst all the catalysts dragging the traders towards optimistic cautious mood favoring the Euro, We expect a bullish trend for the EUR/USD.