German elections: EUR/USD mildly lower as coalition talks begin

The SPD party led by Olaf Scholz won the most votes in the German election. Coalition talks will now take place. These negotiations can be lengthy. EURUSD trades mildly lower.


In line with the polls the SPD led by Olaf Scholz won the largest number of votes in the German elections. The SPD won 25.7% of the votes, whilst the CDU/CSU came a close second with 24.1%, the worst performance by the Conservatives in recent history.  

The smaller parties, the Green party and the FDP won 14.8% and 11.5% respectively making it a successful night for the minorities.  

Coalition talks 

The election results pave the way for coalition talks. There are several outcomes which could come about as a result of coalition talks. Olaf Scholz’s centre left social democrats will initially look to seek a coalition with the Greens and the FDP, in the so-called traffic light coalition.  

However, the CDU/CSU have also said that they plan to try to form a government with the FDP and the Greens. This has been called the Jamaican coalition. So although the SPD’s narrowly won the election, the FDP and the Greens could actually decide who will lead the next coalition government in Germany. 

Coalition talks in 2017 dragged on for six months, many will be hoping that these talks will be quicker given the challenges that lie ahead. Whilst there are other coalition options, the traffic light or the Jamaican coalition are considered a continuation of the status quo in terms of fiscal and EU policies. There could be a slight shift in a policy, particularly in a greener direction but broadly speaking the result indicates continuity. 

Market reaction 

So far, the market’s reaction has been relatively muted. There have been no surprises. The prospect of at three-way coalition prevents market unfriendly scenarios. The DAX has pushed higher and trades over 15600 thanks in part to likelihood of the business friendly FDP being included in the coalition. See two trades to watch

Meanwhile the Euro has come under mild pressure, weighed down by the limbo as talks take place. 

Learn more about the Euro

Where next for the EUR/USD? 

EUR/USD trades below its descending trendline dating back to early September. The RSI points to further losses whilst it remains out of oversold territory. Immediate support can be seen at 1.1680 last week’s low, ahead of 1.1665 the August low. A break below here could expose 1.16 a level last seen in November 2020. On the flip side, a move over 1.1750 the falling trendline and horizontal resistance could negate the near term down trend help the pair towards 1.1790 the 50 sma. 

How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade.

More from EUR


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.