The euro struggled after the coalition talks failed over the weekend. The business-friendly FDP did not want to do business with the Greens and Angela Merkel’s CDU/CSU coalition. The Chancellor ruled out a minority government and talked about going to fresh elections.
But what about renewing the current CDU / SPD coalition? This has been ruled out from the outset by SPD leader Martin Schulz. The center-right socialists suffered their worst outcome in years and decided that going to the opposition is the way to go.
However, new reports coming out of Berlin suggest that Merkel would like to give this coalition a fresh opportunity. Germany’s president Frank-Walter Steinmeier, previously a leader of the SPD, urged all parties to cobble a coalition. Just like a minority government, returning to the polls is unprecedented in Europe’s largest economy.
EUR/USD is on the rise
These hopes, despite not being based on any SPD source, are pushing the euro higher within the range. The pair is now at 1.1753, up from the lows of 1.1732 and a safer distance from yesterday’s trough of 1.1712.
Sure, the movements are limited, and they probably reflect the cautious atmosphere around coalition talks.
1.1712, which was also the high level in August 2015, is an immediate line of support. A further level awaits at 1.1670. Resistance is at 1.1760, which is getting quite close, followed by the recent highs of 1.1820.
More: EUR/USD in mid-range: up or down from here?