Euro gains after Germany's conservatives win, dollar eases
Friedrich Merz was set to become Germany's next chancellor after his party emerged victorious in Sunday's election, though he faces complex and lengthy coalition negotiations after the far-right Alternative for Germany (AfD) surged to a historic second place in a fractured vote.
The euro extended gains from early in the session to last trade 0.46% higher at $1.0508. Investors' focus is now on how quickly Merz's party can form a coalition government to bring about much-needed change to a frail economy.
«The fragmentation of Germany's political landscape will make the upcoming coalition negotiations very complicated,» said Carsten Brzeski, global head of macro for ING Research.
«The risk is high that after tonight, the longing for a significant overhaul of the German economy will last much longer. It is hard to see that the next government will be able to deliver much more for the economy than a short-lived positive impact from some tax cuts, small reforms and a bit more investment.»
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