"A potentially dovish ECB would help" further dollar gain against the euro, said Sean Callow, Senior Currency Strategist, Westpac Bank. ECB President Mario Draghi "was relaxed a month ago but 0.7 percent year-on-year inflation cannot be ignored."
Inflation fell to 0.7 percent year-on-year in October - the lowest reading since November 2009 - a flash estimate from the European Union's statistics office showed last Thursday.
"The Eurozone now has lower headline inflation than Japan," said Mansoor Mohi-uddin, chief currency strategist for UBS. October's inflation reading "is far below the European Central Bank's de facto 2 percent target...the recent run up in the euro from 1.28 to 1.38 over the summer has now peaked."
(Read more: Pressure on ECB to cut rates after inflation shock)
The central bank will therefore likely cut its refinance rate from 0.50 percent to 0.25 percent and the marginal lending facility from 1.00 percent to 0.50 percent while keeping the deposit rate unchanged at zero, Mohi-uddin said.
Still, there is a risk that the ECB will refrain from easing until its December meeting when new economic forecasts are published that month, he said. The data will allow ECB officials "to assess whether the decline in services inflation was temporary and whether Italy's VAT tax rise will start to impact inflation," Mohi-uddin explained.
The euro languished at two-week lows early in Asia on Monday, having suffered its biggest drop in over a year last week as expectations grew the ECB will be forced to cut interest rates to shore up growth, Reuters reported.
(Read more: Were the euro bulls just too hasty?)
The Intercontinental Exchange Inc. traded Dollar Index tracks a basket of six major counterparts of the greenback and the euro represents a near 58 percent weighting, making the gauge prone to swings in the single European currency.
"The ECB announcement bears [are] watching closely," said Nick Bennenbroek, Head of currency strategy at Wells Fargo. "With respect to inflation, risks are typically described as balanced. A noteworthy change here would be if the ECB said inflation risks were to the downside, or expressed concerns that the current level of inflation was too low."
— By CNBC's Sri Jegarajah. Follow him on Twitter: @cnbcSri