Euro Relief Rally Fades

Earlier, the euro rallied in relief as Germany announced an agreement to form a governing coalition. Concerns about Germany had weighed on the 17-nation currency, but a rally took over. Now, though, that rally is fading and the euro is heading down against some of its major counterparts.

As the largest economy in the eurozone, Germany is very influential when it comes to the euro, and when it comes to the performance of the eurozone. Therefore, it has been a bit disconcerting that there have been disagreements on forming a government in the weeks since the German general election. Chancellor Angela Merkel won another term, but her conservatives took enough of a beating that they needed to compromise and work on a deal with the opposing Social Democrats.
Now, an agreement has been reached. Earlier, the euro rallied as relief was expressed. Now, though, that rally has faded. Other concerns about a weak eurozone economic recovery in the face of improvements in the United States and in The United Kingdom are weighing on the 17-nation currency, and the euro has lost some of its earlier gains.
At 14:58 GMT EUR/USD is down to 1.3565 from the open at 1.3569. EUR/GBP is down to 0.8338 from the open at 0.8370. EUR/JPY is up to 138.6150 from the open at 137.4145.

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