The German Chancellor has been trying to stitch together a coalition for the past two months following her party's poor result in September's election.
The minority option would be very risky for her, especially as Germany faces serious challenges with deep-rooted eurozone tensions, immigration pressure and Brexit.
After German reunification in 1990, he went full steam ahead for the euro, a policy in which his opponents, the Social Democrats, believed more than his own Christian Democrats.
Mrs Merkel lost votes over her decision to open Germany's borders in 2015 to more than a million asylum seekers.
Some officials said that a potential delay in the euro zone integration talks was not a big issue because they concerned the future architecture of the Economic and Monetary Union (EMU), now encompassing 19 countries.
"This is the moment where all participants need to reconsider their attitude". "On the other hand, they might see procedural rules, and try to block the parliament and its progress and that might have a long lasting effect", Prof. It fell dramatically against the Japanese yen to 131.16 yen, its weakest since Sept. 15.
He said he would hold talks with leaders of the three parties involved in negotiations.
The dollar index, which tracks the greenback against a basket of six major rival currencies, was broadly flat at 94.00, but was still within sight of its overnight peak of 94.104, its highest since Nov. 14.
The other parties are also committed to reducing carbon emissions, but Mrs Merkel's bloc had not put a date on when to phase out coal.
The fear among Germany's mainstream liberal democratic parties is that the far-right Alternative for Germany (AfD) could do even better next time.
Hardman added that he thought the initial selloff that took the euro to its lows was exaggerated.
SPD chairman Martin Schulz was, however, quick to reiterate that the labour party was "not available to form a new grand coalition" with Merkel's conservatives, vastly complicating the picture.
Christian Lindner, the Free Democrats' leader, justified his decision to break off talks by saying that "we would have been forced to give up our principles and all that we had worked for for years".
Fresh elections in Germany appeared increasingly likely Monday evening after Chancellor Angela Merkel announced that she preferred a new vote over governing without a parliamentary majority, CNN reports. "It is not in France's interest for things to get blocked", the French president said at the start of a meeting with Bernard Accoyer, a leader of France's opposition Les Républicains party.
So Germany will remain for a time on autopilot.
"I expect the parties to make the formation of a new government possible in the foreseeable future", Steinmeier said, adding that the parties had a responsibility that "cannot be simply given back to the voters". Europe, the default setting since the 1950s, will continue to prevail.
This is an experimental feature.
Polls so far have shown little change from the September result.
There is in fact no one with whom we can negotiate in Berlin, and no one in Brussels.
Merkel's trademark calm was on display hours after coalition talks collapsed.
But "we're not Weimar" is not exactly comforting.