Which pair to watch after Merz wins?

Omar Ayoub

February 25, 2025

The rise of the euro and German stocks reflects the market's response to Friedrich Merz's victory in the German legislative elections held on Sunday, February 23, 2025. This victory seems to herald a political shift towards increased government spending, bringing hope for boosting the struggling German economy. The euro experienced a notable recovery against the G10 currencies, rising by about 0.5% against the US dollar, supported by investor expectations that the new government will abandon the conservative financial approach.

Concurrently, the EUR/JPY pair appears poised for a short-term rise, reversing its previous downward trend to an upward one. Currently, this pair is trading at important support levels ranging between 156 and 156.7, enhancing the likelihood of continuing the upward trend and surpassing the recent corrective phase towards a target level of 159.832. It is important to note that this positive outlook will be invalidated if the price falls and closes daily below the 155.506 level, as per analyst analysis.

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Figure 1: EURJPY, H4, Trading View

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