The single currency gained 0.3 per cent in early trading in Europe to $1.0489. The currency briefly hit a high for the year during morning trading in Asia, rising as much as 0.7 per cent to $1.0528. “Obviously some relief is showing through in the euro now,” said Tony Sycamore, a market analyst at IG Australia.

The euro and German stocks rallied on Monday as investors welcomed Germany’s election result that put centrist parties on track to form a coalition, although optimism was tempered by potentially tricky negotiations over economic policy.

Europe must seek to “achieve independence” from the United States, Germany’s likely next chancellor Friedrich Merz said after exit polls showed his opposition conservatives were on track to win Sunday’s election,