German election results give euro a touch

The euro fell slightly on Monday morning, September 25, in the wake of the German election results. The euro traded just over 1,19 against the dollar. BusinessInsider about the effects for the markets.

Angela Merkel may be set to run for a fourth term in the Bundestag, but the right-wing populist Alternative für Deutschland (AfD) party posted a strong performance. AfD received 13,5% of the vote and is expected to win 87 seats in the German parliament.

Pressing effect
Merkel's authority has declined. The emergence of a Eurosceptic party, similar to UKIP in the UK and the National Front in France, is weighing on the euro, SpreadEx analyst Connor Campbell said Monday.

How long until there is a coalition?
On Monday, the euro was down about 0,4% against the dollar. It may be that it can take a relatively long time before Merkel's CDU/CSU manages to form a coalition.

“The Chancellor needs to do business with the Greens and the FDP,” said Interactive Investor analyst Lee Wild. "A long period of uncertainty is not good, especially if the FDP, for example, endangers Germany's relationship with France, because of an aversion to French President Macron. Markets will not like that."As seen above, the EUR/USD continues to gain momentum.

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