The European currency touched its lowest level since mid-September against its Japanese yen on early Monday after the failed attempts of Merkel on forming a three-way coalition. This has heightened uncertainties regarding the future of Europe’s economy.
The euro was already down amidst Asian trading following the released news that suggested a breakdown of the coalition meeting among the parties in Germany. However, it still managed to limit its losses. The euro was last seen lower versus its Japanese counterpart at 131.65 yen on Monday. The common currency notched a two-month low at a 131.16 yen at one point.
Overall, the currency dropped more than 0.4 percent at $1.744 on the same day, plunging as low as $1.1722. This makes euro far away from a one-month high it touched last Wednesday at $1.1862.
German Chancellor Angela Merkel said this day that she would have a formal meeting with the president of Germany to tell him that her attempts on forming a coalition government with pro-business Free Democrats (FDP) and Green have failed.
The verdict on meeting President Frank-Walter Steinmeier have indicated that Chancellor Merkel would not sought for a minority government in partnership with the Greens following the pulling out of the FDP on the coalition meeting. Steinmeier has the power to incite a new election.
OANDA’s head of trading in Asia-Pacific Stephen Innes said the political developments in Germany would influence euro’s movement, but it is surely one of the drivers that we’ll have “right of the bat”.