The euro nudged higher on Monday after Germany's opposition conservatives won the national election as expected, while the dollar trod water amid worries over the growth outlook for the U.S economy. Friedrich Merz was set to become Germany's next chancellor after his party emerged victorious in Sunday's election,

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 German election may fuel optimism about potential fiscal policy reform, which is expected to revitalise Europe's largest economy. The euro and the DAX could strengthen further amid the projected result.