Euro Capped Below $1.1500 as German Election Results Weigh

The euro has remained capped below $1.1500 against the US dollar as German election results weighed on the currency, but lower energy costs and a pullback in oil prices provided some support.

The single currency steadied on Monday after falling to a seven-week low of $1.1454 last week, with political uncertainty surrounding Chancellor Friedrich Merz's centre-right CDU party following its defeat in Mecklenburg-Western Pomerania state elections. The CDU took just 4.9% of the vote, failing to meet the 5% threshold for entering the state parliament.

Brent crude prices have pulled back to around $98.00, about 7% below last week's highs, following Saudi Arabia's repair of its East-West pipeline and increased September supply volumes. This has provided some support for the eurozone as a major energy importer, but the impact is being overshadowed by Germany's election results.

The Federal Reserve raised interest rates last week, while markets are looking ahead to remarks from Chicago Fed President Austan Goolsbee at OMFIF in London and an appearance by ECB President Christine Lagarde in Frankfurt. The upcoming September Purchasing Managers' Index (PMI) releases on Wednesday will also be a key catalyst for volatility.