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.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.