Euro weakness after Merkel fails to gain an outright victory

euro 60 minute chartThe euro is another currency which has been suffering in early trading at the start of a new week, as markets come to terms with the results from the German election, which saw Angela Merkel gain a fourth term, but with a much reduced percentage of the vote, and forcing her into coalition talks with the minor parties in order to remain in power. Indeed there is now some question as to whether such a coalition will be a viable option, and is almost a mirror image of the UK election, which also saw extended delays in the formation of the government and duly propped up by a minority party, namely Northern Ireland’s DUP.

As a result the euro has remained weak, with the initial gapped down open, then closed but on weakly rising volume, before finally rolling over at the start of the London open and creating the price waterfall which has remained in place ever since on the hourly chart. Indeed what was interesting about the rally during the Asia and Far East session was this was accompanied on falling volume, and signalling a classic anomaly of volume price analysis, and duly confirmed as London opened. The negative tone for the euro was given a further push lower on the German IFO Expectations data which came in below forecast at 107.4 vs 107.9 expected, with Current Conditions and Business Climate also missing. As with the pound, this is reflected on the 60 minute currency strength indicator with the euro ( the orange line) falling strongly and coupled with a rising US dollar, but with both now approaching an over sold and over bought state respectively.

By Anna Coulling

About Anna 1054 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

1 Comment on Euro weakness after Merkel fails to gain an outright victory

  1. That day, I reached up 150 pips and your analysis almost near my analysis. Really, It made me surprised. Thanks Anna. You’re great!!

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