The euro held steady around $1.13, slightly below the nearly three-year high reached in April, continuing to benefit from broad dollar weakness. Investors remained cautious amid persistent uncertainty surrounding global trade dynamics.
Euro little changed at $1.13
Traders remained focused on the ongoing trade war, particularly negotiations between the US and several Asian countries, while talks with China appeared to have stalled, fueling concerns over prolonged supply chain disruptions and reduced global demand. Meanwhile, in domestic European politics, Friedrich Merz faced an unexpected setback after failing to secure election as German Chancellor in the first round of parliamentary voting. The outcome surprised markets, which had largely priced in a smooth transition of leadership. Although the next steps remain uncertain, the failure to secure a clear mandate potentially delayed Merz’s swearing-in and raised questions about the stability of his leadership. His CDU-led coalition with the centre-left Social Democrats, which had pledged to boost public investment in infrastructure and green technologies, had been bolstering confidence in Germany’s economic recovery from recent slowdowns.
Political updates
Any prolonged political uncertainty could dampen investor sentiment and weigh on the eurozone's broader recovery outlook. On the monetary policy front, the European Central Bank is expected to continue cutting interest rates in June as it battles sluggish inflation and uneven growth across member states. In contrast, the Federal Reserve is widely expected to hold rates steady this month, as US policymakers balance the risks of inflation persistence with signs of moderating economic activity.
