Euro slides after German coalition talks break down

The euro hit a two month low against the yen on Monday, as German chancellor Angela Merkel’s effort to form a three way coalition government failed raising concerns over political uncertainty in the euro zone’s largest economy. The decision to meet president frank Walter Steinmeier, who has the power to call a new election, signaled that Markel would not seek a minority government with the green after the FDP unexpectedly pulled out of the coalition talks. The euro fell 0.4 percent on the day to $1.1744. It slipped to as low as $1.1722 in early Asian trade, pulling away from a one month high of $ 1.1862 that had been set on Wednesday last week. The dollar has been weighed down recently buy lingering doubts about the prospects for US tax reforms, including tax cuts, which could give a boost to economic growth. Any potential delay in the implementation of tax cuts, or the possibility of proposed reforms being watered down would tend to work against the US currency.