The ECB will remain under pressure to cut interest rates more aggressively in the short term. Nevertheless, the ECB still looks the most likely bank to safe-guard the medium-term value of currency and resist depreciation which should help limit near-term losses

The European data was mixed on Friday, although evidence of severe weakness in the industrial sector is likely to be the principal focus. German industrial production fell by 3.1% in November while French output dipped 2.4%. The retail sales data was more favourable with a 0.6% Euro-zone monthly increase, but fears over the economy will tend to intensify.

There will be additional pressure on the ECB to sanction a significant interest rate cut this week which will curb Euro support. There were also structural vulnerabilities with Ireland's credit rating downgrade by Standard& Poor's while there was unease over plans to form a German bank to consolidate bad debts. Euro-zone fears will continue to unsettle the Euro with uncertainty very high.

The dollar strengthened to highs near 1.3450 against the US currency later in US trading as the Euro continued to struggle on the crosses. The Euro remained on the defensive on Monday with a test of support below 1.34 and a low below 1.3350.