The euro edged away from an 11-year low on Monday as investors braced for a crucial meeting later in the week which could see the European Central Bank take its boldest steps yet to revive the euro zone's moribund economy.
The ECB is widely expected to launch quantitative easing—effectively the printing of euros to buy government bonds—when it meets in Frankfurt on Thursday. But it is unclear how the program is designed, how big it is, and whether it will be seen as credible and sufficient.
A Reuters poll published on Monday showed money market traders expect the ECB to announce 600 billion of sovereign bond purchases, but they also believe this will not be enough to bring inflation up to target.
Data released on Monday showed the euro zone's current account balance shrank in November, suggesting continued euro weakness, but analysts said the single currency could bounce if the ECB disappoints on Thursday.
Read MoreSNB shock will only cement CHF & Yen safe haven status
The euro was trading at $1.1601, up 0.3 percent on the day but not far from a trough of $1.14595 hit on Friday. It is already down more than 4 percent in January—its biggest monthly fall in 2-1/2 years.
"If they (the ECB) disappoint, there is definitely an argument that you would get an immediate covering of euro shorts and it may also lift euro area bond yields,'' said Stephen Gallo, European head of FX strategy at BMO Capital Markets in London. "But in our opinion that's a rally that you have to really look to sell into."
The Swiss National Bank removed one of the euro's few remaining pillars of support last Thursday when it stunned markets by abandoning its three-year-old cap on the Swiss franc against the euro. The move also fueled speculation that the SNB was acting in anticipation of more aggressive easing from the ECB.
"Following the SNB action last week, there has been an (unrealistic in our view) build-up of expectations that the ECB could make a BoJ-style 'shock and awe' announcement," Adam Cole, global head of FX strategy at RBC Capital Markets in London, said in a research note.
Traders said there would be volatility at the end of this week ahead of Greece's snap election on Sunday which, with anti-bailout party Syriza leading in the polls, could further undermine the euro zone's credibility.
The euro gained 1.5 percent on the day against the Swiss franc to trade above parity at 1.0088 francs, but it has still lost 16 percent against the Swiss currency since the SNB abandoned its cap of 1.20 francs per euro.
Swiss Finance Minister Eveline Widmer-Schlumpf said on Sunday that she expects the franc to settle at around 1.10 per euro, a level she believes Swiss exporters should be able to withstand.