Euro Remains Under Pressure

The euro continued to flounder on Monday morning after poor inflation data, and a surprise rate cut from the European Central Bank helped push the common currency down over the past week.

The euro traded at $1.336 at 5:15 GMT on Monday as the region came one step closer to setting up a banking union.

Euro-zone inflation in October was down to 0.7 percent, far below the ECB's 2 percent target and a steep drop from September's 1.1 percent. The figures put pressure on the region's central bankers to step in and help mitigate the growing deflation risk.

The euro zone has come a long way since this time last year, when investors were predicting the union's demise as several of its members struggled with financial crises. This year, the bloc emerged from recession and posted 0.3 percent growth in the second quarter.

The bloc has a long way to go before its recovery will be considered sustainable. With no more emergency fires to put out, eurozone policymakers have turned their focus to fixing the core problems of the region and preventing the same situation from repeating itself.

CNBC reported that German Chancellor Angela Merkel was able to come to an agreement with her potential coalition partners, the Social Democrats, about the euro zone's proposed banking union. A banking union is considered by many as a necessary step in order for the bloc to avoid another financial breakdown. However, many countries, including Germany, are wary of giving up power over their national banks.

Merkel's agreement with the Social Democrats says that in the terms of the banking union, the Ecofin council will have the final say over whether or not to close failing banks rather than giving that power to the European Commission. When the agreement is solidified, Germany's Finance Minister Wolfgang Schaeuble will present the idea at a meeting with his colleagues on Thursday.