Euro Under Pressure as German Political Risks Mount

2026-09-21 07:59 By Joana Ferreira 1 min. read

The euro remained under pressure around $1.148, close to its weakest level since late July, as political uncertainty in Germany and concerns over France’s public finances weighed on sentiment.

Germany’s governing CDU suffered its worst-ever state election result in Mecklenburg-Western Pomerania, failing to win a single seat and prompting some party members to call for Chancellor Friedrich Merz to step down after just 16 months in office.

In Berlin, Merz’s CDU, which has governed the German capital since 2023, also trailed the Left party, which won 25.7% of the vote.

The German political establishment had already been shaken by the CDU’s defeat to the anti-immigration AfD in Saxony-Anhalt two weeks ago.

Meanwhile, France’s public finances are coming under increasing scrutiny, with Scope Ratings downgrading the country and Morningstar DBRS shifting its outlook to negative, adding to a growing series of warnings over France’s fiscal position ahead of next year’s presidential election.



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Euro Under Pressure as German Political Risks Mount
The euro remained under pressure around $1.148, close to its weakest level since late July, as political uncertainty in Germany and concerns over France’s public finances weighed on sentiment. Germany’s governing CDU suffered its worst-ever state election result in Mecklenburg-Western Pomerania, failing to win a single seat and prompting some party members to call for Chancellor Friedrich Merz to step down after just 16 months in office. In Berlin, Merz’s CDU, which has governed the German capital since 2023, also trailed the Left party, which won 25.7% of the vote. The German political establishment had already been shaken by the CDU’s defeat to the anti-immigration AfD in Saxony-Anhalt two weeks ago. Meanwhile, France’s public finances are coming under increasing scrutiny, with Scope Ratings downgrading the country and Morningstar DBRS shifting its outlook to negative, adding to a growing series of warnings over France’s fiscal position ahead of next year’s presidential election.
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