The euro was mixed today after German Chancellor Angela Merkel announced that she will not seek re-election as her party’s leader. Markets were not particularly pleased with the announcement.
Merkel announced that she will not run for the seat of the chief of her Christian Democratic Union or for any other political office for that matter. This decision was likely a result of the poor performance of the governing coalition in the regional elections over the weekend. Merkel was considered to be one of the most prominent pro-EU and pro-euro politicians, therefore the news was very negative to the euro.
Market analysts speculated that the euro’s weakness was also a result of the risk-off market sentiment that propelled the US dollar higher. The argument does not explain, though, the euro’s decent performance against such safe currencies as the Japanese yen and the Swiss franc.
EUR/USD declined from 1.1398 to 1.1370 as of 12:58 GMT today. EUR/GBP dropped from 0.8886 to 0.8870. At the same time, EUR/JPY rallied from 127.54 to 127.93.
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