The Euro trimmed losses against the U.S. dollar and the Japanese yen in thin trading on Monday, as financial markets across Asia, the UK and the U.S. closed for the New Year holidays. EUR/USD pared losses during early European trading, hitting 1.2954, up from the session low of 1.2922.

The single currency hovered close to a 15-month low against the greenback last week, as renewed concerns over the sovereign debt crisis in the Eurozone continued to weigh on the currency. EUR/USD had hit 1.2857 last Thursday, the pair's lowest level since September 14, 2010.

The Euro traded almost unchanged versus the yen, with EUR/JPY losing 0.02 percent to trade at 99.64. On Friday, EUR/JPY traded below 100 for the first time since June 2001, as debt problems in the Eurozone's nations continued to hit the single currency.

Earlier on Monday, Markit data showed Eurozone's manufacturing activity declining for a fifth consecutive month in December but the pace of decline had eased slightly from the previous month.

The Eurozone Manufacturing Purchasing Managers' Index rose slightly in December to 46.9 from November's reading of 46.4, unchanged from an earlier preliminary reading.

Despite the rate of decline easing slightly in December, production appears to have been collapsing across the single currency area at a quarterly rate of approximately 1.5 percent in the final quarter of 2011, said Chris Williamson, chief economist at Markit.

Worryingly, new orders are falling at a far faster rate than manufacturers have been cutting output, meaning firms have been reliant on orders placed earlier in the year to sustain current production levels, said Williamson

However, the Euro traded higher against the British pound, with EUR/GBP gaining 0.13 percent to trade at 0.8346. The sterling also traded lower against the greenback, with GBP/USD dipping 0.17 percent to hit 1.5521.