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Forex - EUR/USD slumps after Merkel takes hit in German elections

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Forex Pros - The euro was down against the U.S. dollar on Monday, slumping to a six-day low after German Chancellor Angela Merkel's conservative party suffered a loss in elections in a key state.

EUR/USD hit 1.4019 during late Asian trade, the pair's lowest since March 18; the pair subsequently consolidated at 1.4038, shedding 0.34%.

The pair was likely to find support at 1.3979, the low of March 18 and resistance at 1.4194, Friday's high.

German Chancellor Angela Merkel's Christian Democratic Union won 39% of the votes in Baden-Wuerttemberg, its worst result since 1952, while its Free Democratic Party allies won 5.3%, according to results on the state election website.

The loss of the regional stronghold could limit Merkel's ability to pass legislation as her coalition centre-right government deals with nuclear power, military action in Libya and the ongoing euro zone debt crisis.

Meanwhile, a European Union summit ended in Brussels on Friday without addressing all the loose ends of the euro zone's sovereign debt crisis, after EU leaders agreed to reduce the startup capital for the future euro emergency fund.

The paid-in capital as of 2013 will be EUR16 billion, less than half the EUR40 billion reached in a March 21 agreement.

Elsewhere, the euro was up against the pound, with EUR/GBP adding 0.06% to hit 0.8788.

Later in the day, European Central Bank President Jean-Claude Trichet was to speak at the Academy of Sciences, in Paris, while the U.S. was to release industry data on pending home sales as well as official data on personal spending, personal income and personal consumption expenditures.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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