The Euro (EUR) is trading flat to the US Dollar (USD) while outperforming most of the G10 currencies as it consolidates in a tight range around 1.16, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

ECB seen staying neutral after November inflation data

"Preliminary euro area CPI data for November were largely in line with expectations, with headline coming in at 2.2% y/y (vs. 2.1% exp. & prev.) while core printed 2.5% y/y, meeting expectations while remaining unchanged from the prior month."

"The data offer little to change the ECB off of its neutral stance and markets are pricing no policy change for the next meeting on December 18. Interest rate differentials remain supportive as the Germany-US 2Y spread hovers just below its recent 14 month high. Risk reversals are also suggestive of a positive shift in sentiment and generally trading in tandem with spot."

"The 50 day MA (1.1613) appears to be offering near-term resistance and limiting the EUR’s near-term gains. We remain assured by the RSI’s push back above 50—into bullish territory—and see the nearterm balance of risk as favoring further upside. We see resistance at 1.1640, 1.1700, and 1.1750. We look to a near-term range bound between 1.1580 and 1.1680."