German parties SPD, CDU and CSU neared forming a coalition as a deal was struck on the thorny issue of immigration. Also a deal was struck on the energy issue and the next issues to be discussed will be labour policy and health care. Discussions are to draw to a closure by Sunday and the final deal is expected to be set up for vote by SPD members. As discussions progress and more progress is made, we expect the EUR to strengthen as more political stability should emerge.
The EUR/USD moved in a sideways manner on Friday and during today’s Asian morning with some selling pressures, moving lower than the 1.2495 resistance level. We see the case for the pair to continue to trade in a sideways manner and selling pressures could increase as the financial data to be released today could prove neutral for the EUR and positive for the USD. Should the pair come under buying pressure we could see it breaking the 1.2495 resistance level and aim for the 1.2600 resistance barrier. On the other hand should it come under selling interest, it could break the 1.2355 support level and hover slightly below it.