1014 GMT - The risks of a further euro depreciation in the near term are building, MUFG Bank's Derek Halpenny says in a note. Chancellor Friedrich Merz's local election defeat for his Christian Democratic Union Party at the weekend helped reinforce those risks, he says. Elevated energy prices and French politics also pose potential headwinds. The technical backdrop for the euro also doesn't look good as it breaks below key levels, he says. "While the move is still more of a dollar story, the macro backdrop in the eurozone could start to weaken if the negative energy terms of trade shock starts to undermine business confidence." The euro falls to an eight-week low of $1.1405, LSEG data show.
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