The German federal election result yielded the expected shift to the right—a win for the conservative CDU/CSU and gains for the far-right AfD, Scotiabank's Chief FX Strategist Shaun Osborne notes.

EUR firms modestly, falls back on election

"The CDU did not win a majority, however, and will need to forge a coalition—most likely with the out-going Social-Democrats and rely on support from other, smaller parties – to govern."

"Coalition talks may take some weeks, however. EURUSD rallied to retest the low 1.05 area but resistance around 1.0530 capped gains again, keeping the near-term outlook for spot more or less flat."