Price action for the EUR on Monday was the simple mirror image of the USD: quiet through Asia, up through the European lunchtime then reversing lower during the New York Day. EUR/USD began around 1.1930, reached a high of 1.1958 immediately before the US new home sales numbers then promptly lost 60 pips to dip back onto a 1.18 handle. It was not a dissimilar pattern against both the Aussie and Kiwi Dollars though NZD/EUR did outperform AUD/EUR amidst the bout of short-covering we described above. There were no fresh Eurozone data or Central Bank speakers on Monday, so it was back to watching the unfolding Coalition talks in Germany. By common consensus, the immediate loser in these talks is SPD leader Martin Shulz, though his party may still be able to extract significant concessions as the price for its ongoing support of the CDU/CSU. It may gain control of the Finance Ministry or it may force Merkel’s CSU partner to abandon the proposed 200,000 annual cap on asylum seekers. For her part, Angela Merkel said only that global challenges such as relations with Russia and the US needed a Germany “able to act… President Macron’s plans for EU reform had led to an “expectation that we draw conclusions and position ourselves”. In words which were widely interpreted as a call for a Grand Coalition, she said, “given the conflicts we have in the Middle East, given the situation in Russia, the situation in the United States of America, I think it is good if Germany is able to act. That is why we believe that such a stable government should be formed, in terms of Europe, in terms of our economic strength, in view of the new challenges we face”. We’ll now have to see if this helps put a floor under the EUR after Monday’s reversal.