The euro snapped a two-day rising streak and edged lower today after the German election results prompted some investors to lock profits into one of the most profitable currency trades of the year.
Money managers have piled into the single currency and related bets in 2017, particularly European equities.
Shortly before 6pm Irish time the euro was at £0.8805, down just over half a percent on the day, while against the dollar the euro was 0.9% lower at $1.1844.
This is as a result of the euro zone economy regaining momentum and as its monetary policy outlook diverges from its counterparts in the US and Japan, pushing the euro up over 13% this year.
Analysts said the election impact is limited as the German result is more of a domestic political story for now rather than a regional European trend.
They said the euro will be more sensitive to any shift in direction from the European Central Bank policy.
Merkel did win a fourth term in office on Sunday but will have to build an uneasy coalition to form a government after her conservatives lost support in the face of a surge by the anti-immigration Alternative for Germany.
Despite winning the most votes, Merkel's bloc slumped to its worst result since 1949 and her current Social Democrat coalition partners said they would go into opposition after tumbling to 20.7% in projections, a post-war low.