EUR Weaker After German Coalition Talks Begin

The euro slipped below $1.18 for the first time in over a month on Tuesday after its worst day this year, as investors worried that months of coalition talks in Germany could hit the economy and make closer euro zone integration difficult.

German Chancellor Angela Merkel, who won a fourth term in elections on Sunday but now faces a tough juggling act to form a government with other parties, on Monday struck a note of caution with respect to French calls for fiscal union.



French President Emmanuel Macron, who wants a fundamental overhaul of the European Union’s single currency zone and whose ideas include creating a euro zone budget and a euro zone finance minister, will lay out his plans in a speech in Paris at 1300 GMT.

But the results of Germany’s election have forced Merkel to consider a new coalition including the liberal Free Democrats (FDP), a party critical of Macron’s ideas on Europe, and investors are therefore worried the reforms that they would welcome will not end up going through.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza