The euro fell against the dollar on Tuesday as investors questioned the reformist agenda of Germany's new government, and before publication of minutes from the US Federal Reserve's latest rate-setting meeting. The euro eased to 1.2040 dollars in early European trading from 1.2065 late on Monday in New York. The dollar stood at 113.86 yen compared with 114.07 yen late on Monday. The European single currency had fallen as low as 1.2013 earlier on Tuesday. One day after Angela Merkel was appointed as Germany's first female chancellor, ending nearly a month of political stalemate, economists remained sceptical over economic reforms in the euro zone's biggest economy. "The dollar has strengthened further against the euro with market participants concluding that the prospects for the grand coalition in Germany remain questionable," said Bank of Tokyo-Mitsubishi analyst Derek Halpenny. German Chancellor Gerhard Schroeder relinquished his seven-year grip on power on Monday in favour of a left-wing coalition government led by his conservative arch-rival Merkel. CALYON analyst Mitul Kotecha said that over the coming weeks "the euro could remain under downward pressure" as wrangling continued over an agreement that could water down economic reforms.