Euro Bounces After Decline Caused by Failed German Coalition Talks

The euro fell intraday after the news that German Chancellor Angela Merkel failed to form a coalition government. Yet the currency has bounced against most of its rivals by now, trading near the opening level.

Merkel’s bloc led by Christian Democrats weakened after winning the September election with a lower number of seats, making the German Chancellor to seek an alliance with other parties in hope to form a coalition government. So far, such talks were fruitless. Yet markets were not overly worried as was proven by the solid performance of European stocks, which helped the euro to bounce after the intraday drop.

EUR/USD was down from 1.1785 to 1.1722 intraday but bounced to trade at 1.1781 as of 11:50 GMT today. EUR/JPY was at about 132.07 after opening at 132.17 and falling to the daily low of 131.16.

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