EUR/USD flows: German debt reform and a Ukraine minerals deal?

Friedrich Merz, presumed to be Germany’s next chancellor, announced the plan to set up a EUR500bn special defense fund, agreed with his likely coalition partners, the SPD. While the incoming parliament will give the far left and far right a combined veto power on constitutional reform, it appears that Merz will get it pushed through by the outgoing parliament. Reuters reports that Trump is eager to announce minerals deal with Ukraine when he speaks to Congress this evening. It remains to be seen whether Ukraine will get any security guarantees out of such a deal. If not, they will be seen as having been effectively forced into accepting. A peace agreement may remain distant.