EURUSD’s zone of interest after German election

Polls have now closed in Germany’s parliamentary elections.

Exit polls indicate Friedrich Merz’s center-right Christian Democratic Union (CDU) has secured a clear victory, positioning him as Germany’s next chancellor.

The far-right AfD is projected to achieve its best result yet, currently in second place with 20.2%, nearly doubling its 2021 support. However, the Bundestag’s composition remains uncertain, and Merz has ruled out cooperation with the AfD.

Prolonged coalition talks could lead to a government divided on economic recovery and international policy, which could be bearish for the euro. With this in mind, the 61.8% to 50.0% Fibonacci zone could be an area of interest (to begin with at least), which coincides with flattening longer moving averages.