Euro Climbs as CDU Wins German Election
- Feb 24
- 3 min read
GBP : GBP/USD regains positive traction
Beginning the week on a high note, the GBP/USD pair rose over the mid-1.2600s during the Asian session, getting closer to a two-month high that was reached on Friday. As sentiment toward the US dollar (USD) declines, spot prices now aim to build on the momentum above the 100-day Simple Moving Average (SMA).
Friday's positive UK Retail Sales data, which increased 1.7% MoM in January from the previous month's upwardly corrected estimate of -0.6%, continues to strengthen the British Pound (GBP). In addition, the UK Services PMI unexpectedly increased from 50.9 in January to 51.1 in February. This mostly obscured the UK Manufacturing PMI's decline to 46.4 in February, a 14-month low.
The GBP/USD pair appears to be largely untouched by the pessimistic view of the Bank of England (BoE) and is still dependent on the USD price dynamics. The underlying background indicates that the path of least resistance for spot prices is still upward in the absence of any pertinent economic announcements that could move the market. This in turn strengthens the likelihood that the recent, well-established uptrend that has been in place for the past month or so will continue.
EUR : Euro climbs as CDU wins German Election
As investors evaluate the outcome of the German election, the Euro (EUR) gains ground against its competitors to start the week. Eurostat will provide updates to the January inflation data later in the session, and Germany's IFO sentiment data will be included in the European docket. The Federal Reserve Bank of Chicago will issue the January National Activity Index data in the second half of the day.
With roughly 28.6% of the vote, Friedrich Merz's CDU/CSU won the German election. Olaf Scholz's SPD fell to third place with 16.4%, while the far-right AfD finished in second with 20.8%. A two-party coalition between the CDU/CSU and SPD appears to be the most likely outcome in light of these findings. The Euro began the new week on a positive note, with the outcome mostly matching the surveys. The EUR/USD exchange rate was up 0.5% on the day above 1.0500 at the time of writing. The EUR/GBP trades in positive territory just above 0.8300, reflecting the broad-based EUR rise, while the EUR/JPY advances more than 0.5% above 157.00.
USD : Dollar continues to be vulnerable
The US Dollar Index (DXY), which measures the US dollar against a basket of other currencies, begins the week on a negative note and, during the Asian session, falls to its lowest level since December 10. At present, the index is situated in the vicinity of 106.25, and bears are attempting to capitalize on any dip beneath the 100-day SMA.
Walmart's poor sales projection sparked concerns about the health of US consumers against the backdrop of the dismal publication of US retail sales numbers. Concerns about the US GDP forecast were further heightened by data released on Friday, which raised fears that US President Donald Trump's policy changes will further depress consumer spending. This turns out to be a significant contributing component.
The flash US Composite PMI for S&P Global fell from 52.7 in January to 50.4 in February, suggesting a less robust rise in private sector business activity overall. According to separate data from the University of Michigan, the US Consumer Sentiment Index fell more than anticipated in February, hitting a 15-month low of 64.7.
