Any divisions between the ECB and national governments would undermine the Euro.

ECB members maintained a tough stance on inflation during Friday and this will tend to limit the scope for Euro selling in the short term. There was, however, evidence that global central bank Euro buying had eased significantly on Friday with a possible perception that the Euro offered little value at current levels.

Official comments on currencies will continue to be watched very closely this week. In particular, the possible divergence in commentary between the ECB and political figures will be very important.

The ECB will want to maintain a tough stance on inflation, but governments will be increasingly concerned over growth prospects. In these circumstances, there will be the increased risk of divisions between the two factions. Any serious tensions between the two sides would be a significant negative factor for the Euro.