The euro is likely to remain under pressure on financial markets this week, with most analysts believing it could decline further from a low of just under $1 touched late last week.
A string of economic figures due from Germany this week will be closely watched for evidence of the strength of economic recovery there as doubts over the extent of the uplift underway in the main euro zone economies has been one of the factors undermining the currency.
The German chancellor, Mr Gerhard Schroder, will hope a more upbeat economic picture will give him a welcome political boost.
Analysts expect a fall in seasonally adjusted German jobless numbers in November. "The trend of falling seasonally adjusted figures should continue in coming months, mostly because of an improvement in the economy," said Mr David Kohl at Bank Julius Baer in Frankfurt.
The outlook for next year remains upbeat. Last week Mr Schroder was faced with the prospect of 70,000 builders swarming to the dole offices after ailing construction firm Philipp Holzmann AG said it was close to bankruptcy.
That scenario fired Mr Schroder into action and he drew up a 250 million mark ($128 million) government rescue plan. There are signs that his injection of state credits to rescue Holzmann have boosted his popularity at home, but they have been criticised by the European Central Bank, resulting in tensions which have also served to undermine the single currency.
In an interview published ahead of his SPD party congress, Mr Schroder said that markets are sometimes wrong and need corrective government intervention.
The remarks follow criticism last week from European Central Bank President, Mr Wim Duisenberg, who chided the German leader for denting investor confidence and the euro.
"As much market as possible, and as much intervention as needed," Mr Schroder told the Tagesspiegel daily. "One must follow market forces but also keep in mind they sometimes can be wrong. Those mistakes do not have to be."
By contrast, in comments on Saturday Mr Schroder was calm about the falling value of the euro and said he saw no need for intervention.
In the newspaper interview on Sunday Mr Schroder also said Germany was an appropriate model for the rest of Europe and that he was confident he would be re-confirmed as leader of the Social Democrats next week despite a rocky first year as chancellor.
