German politics fail to encourage EUR/USD breakout for now

As seen above, it’s not the first time this year that the pair is knocking on that door of the 1.0500 level. Buyers had a good opportunity again yesterday to tie a breakout to German political developments. But alas, it wasn’t the case as the euro saw gains fizzle out by the time we got to European trading.

Friedrich Merz’s CDU/CSU alliance confirmed that they will be looking to pair up with the SPD to form a more centrist coalition. And that is despite the latter’s limp showing in the election. Both parties last governed together during the 2018 to 2021 period.

With the Greens left out in the cold, it means the push for any debt brake reform/changes is not really going to be all too significant. So, that sort of takes away the glimmer of hope since Sunday night.

Going back to the EUR/USD chart, we’re sort of back to where we were before the weekend.

The pair is failing to secure a break of 1.0500 but buyers are keeping poised overall. The lows this week of 1.0445-60 are holding at the 100 and 200-hour moving averages still. The key support region is seen at 1.0460-62 currently, allowing for buyers to maintain a more bullish near-term bias.

That will at least keep discussions centered around 1.0500 for now. But a break of the near-term support region above will shift back the focus of a return to 1.0400 and settling back into the range we’ve been seeing since the turn of the year at least.