Friedrich Merz’s position as German chancellor faces sustained pressure from record-low approval ratings near 10 percent and heavy CDU losses in September 2026 state elections in Saxony-Anhalt, Mecklenburg-Vorpommern, and Berlin, where the party fell below the 5 percent threshold in one case and trailed both the AfD and Die Linke. These results have intensified coalition strains within the CDU/CSU-SPD government, highlighted by the mid-October resignation of Labor Minister Bärbel Bas amid internal criticism. Merz has responded with party retreats, pledges to cut electricity taxes, and insistence on pension and economic reforms, while receiving public backing from CSU leader Markus Söder and several state premiers. Recent diplomatic activity, including a Kyiv visit and continued Ukraine support, has not offset domestic challenges, leaving traders focused on risks of a coalition breakdown or internal leadership shift before the next scheduled federal vote.