German elections were held last weekend and results point to a shift in power in Europe's largest economy. Results showed that SPD, led by Olaf Scholz, won elections with a 25.7% support. CDU/CSU - political party of the long-time German Chancellor Angela Merkel - received 24.1% support. Olaf Scholz, leader of SPD, has already claimed election victory and said that his party has a mandate to form a government. Scholz specified that a coalition agreement may be struck with Greens and Free Democrats, who scored third and fourth in elections with 14.8% and 11.5%, respectively. What's more important, Scholz signalled that he wants CDU/CSU, previous German ruling party and its previous coalition partner, to stay in opposition. Nevertheless, reaction of the market to the results was rather small as this was the outcome that was more or less expected.
A look at the EURJPY chart shows us the pair dropping below the price zone marked with the 61.8% retracement of the downward move launched at the beginning of September. As the drop continues to deepen, markets' attention has shifted to the near-term support marked with 50% retracement (129.35 area). Note that this zone is additionally being strengthened by the lower limit of local market geometry and as a result is a final support guarding the short-term upward trend.
Source: xStation5
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