© Reuters.  Euro trims losses as dollar remains on the defensive© Reuters. Euro trims losses as dollar remains on the defensive

Investing.com – The euro pared back losses against the other major currencies on Monday, pulling away from overnight lows hit after the collapse of German coalition talks raised fears over political uncertainty in the euro zone’s largest economy.

EUR/USD was at 1.1795 by 04:17 AM ET (09:17 AM GMT), after touching an overnight low of 1.1723.

Negotiations aimed at forming Germany’s next coalition government broke down late Sunday night after the pro-business Free Democratic Party (FDP) walked out of the talks.

The collapse of talks leaves German Chancellor Angela Merkel with the option of forming a minority government. If no new government is formed the president can call a new election.

Against the yen, the euro was last at 132.27, recovering after hitting a two-month trough of 131.29 overnight.

The euro pared back losses against the pound, with EUR/GBP last at 0.8893.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 93.56, off an earlier high of 93.95.

The dollar remained on the back foot amid lingering doubts over whether Republicans can pass a historic tax overhaul.

President Donald Trump tweeted on Sunday that Senator Jeff Flake will oppose the Republican tax bill, but the senator’s office said he has not yet made up his mind.

Last week the House voted to pass a tax bill that would lower corporate taxes and cut individual taxes for most households in 2018, in a step towards the biggest U.S. tax code overhaul since the 1980s.

Senate lawmakers are expected to vote on their version of the bill after this week’s Thanksgiving holiday.

The dollar was little changed near one-month lows against the yen, with USD/JPY at 112.15.

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