The EUR/USD exchange rate surged during trading on Tuesday in response to the reform proposals introduced by the CDU/CSU party coalition, which won the elections on Sunday (February 23, 2025).
The EUR/USD rose by 1.352 points (135.2 pips), reaching 1.06232 in yesterday’s trading, and continued to climb this morning, Wednesday (March 5, 2025), hitting 1.06372, marking the highest level since mid-November.
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On Tuesday, the CDU/CSU coalition proposed to allocate €500 billion for infrastructure development. Additionally, they plan to reform the current fiscal deficit rule of 0.35% of Gross Domestic Product (GDP) to over 1%.
This strategy could lead to higher economic growth in Germany, which positively influences the EUR/USD. Furthermore, the U.S. dollar is facing pressure as several economic indicators suggest a slowdown in the U.S. economy.
The sharp increase in the EUR/USD has caused the U.S. dollar index to plummet, creating favorable conditions for gold, which saw a significant rise on Tuesday, reclaiming values above $2,900 per troy ounce.
