Merkel joins in Euro bashing club

German politicians are rarely the ones talking on exchange rates, however German Chancellor Angela Merkel deviated from her usual path to comment and bash Euro down.

• German Chancellor at a conference in Berlin extended her support to European Central bank's monetary policy stance. Ms. Merkel extended her comments saying that policies by ECB is helping the European monetary Union to return from the verge of deflationary cycle.

• Strongest among her comments - "Strong Euro means that it is more difficult for countries such as Spain and Portugal to reap the benefits of reform".

Euro had taken an immediate hit from the comments, trading as low as 1.115 against dollar from 1.122, however the single currency has recovered somewhat after immediate selloffs.

What the comments mean for longer term?

• Many in Germany including Bundesbank president Jens Weidman has remained harsh critique of ECB policies, with many suggesting it has taken a toll on savers and insurance companies. However with Merkel in for lower Euro and interest rates, it will be hard for these critiques to gain traction.

• Though Bundesbank likely to remain opposed to ECB action, support of Merkel suggests ECB is unlikely to change its stance very soon, which makes Euro bulls vulnerable.

Euro is currently trading at 1.118 against dollar and 0.722 against pound.