The euro rose in European trading on Wednesday against a basket of global currencies, extending its positive momentum for a third consecutive session versus the US dollar and moving close to breaking a two-week high, supported by persistent inflationary pressures facing European Central Bank policymakers.

Fresh official data showed an unexpected rise in headline consumer inflation in November, reducing the likelihood of an ECB rate cut in December.

Price Overview

EUR/USD climbed 0.2% to 1.1644$ from an opening level of 1.1622$, after touching an intraday low of 1.1617$.

The euro ended Tuesday up more than 0.1% versus the dollar, marking a second straight daily gain supported by European inflation data. The currency had reached a two-week high of 1.1653$ the day before.

Inflation in Europe

Official figures released yesterday showed an unexpected increase in euro-area inflation, highlighting persistent price pressures facing ECB policymakers.

Headline CPI rose 2.2% year-on-year in November, above market expectations of 2.1%, after a 2.1% increase in October.

Core CPI rose 2.4% in November, in line with expectations and unchanged from the previous month.

European Interest Rates

Following the inflation release, money-market pricing for a 25-basis-point ECB rate cut in December fell sharply from 25% to just 5%.

Sources told Reuters the European Central Bank is leaning toward maintaining interest rates unchanged at its December meeting.

Investors now await additional euro-area data ahead of the 1718 December meeting to reassess rate-cut probabilities.