Summary:
The euro eased Wednesday after Germany elected Merz chancellor—marking the first post-WWII candidate to lose in the first round.
The euro eased on Wednesday after the German parliament elected conservative leader Friedrich Merz as chancellor. But he was the first chancellor candidate since World War II to fail to win election in the first round.
The Chancellor vowed reforms and new investments as the country's centrist parties signed a coalition agreement and announced additional members of the cabinet.
The ECB made yet another 25-bp interest rate cut at April's meeting as tariff turmoil along with a prolonged war in Ukraine has created widespread uncertainty and spurred fears about growth outlook.
The euro zone economy grew by a stronger-than-expected 0.4% in Q1, flash data from Eurostat showed. A plunge in energy prices in the current quarter may help cool inflation further.
Germany rose 0.2% over the same period and French GDP added 0.1% across the three-month stretch. Southern European and smaller economies outperformed, with Italy's output growing by 0.3%.
The EU is preparing for the possible end of a 90-day tariff truce, after which these levies could rise to 20% on 8 July. Its trade chief said the bloc will not be pressured into an unfair trade deal with the US.
The single currency faces downside risks given double top pattern. The initial support is seen around 1.1290, a break below which could expose 1.1280.
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