Wulff resigned Friday rather than face prosecution over corruption charges that surfaced last year soon after Merkel's Christian Democrat buddy became president in the aftermath of another presidential resignation. It wasn't clear if resignation would save Wulff from prosecution.
Wulff's predecessor Horst Koehler, a former head of the International Monetary Fund, stepped down as president in May 2010 after remarks he made suggesting German international military missions could be used to drum up trade.
Koehler's exit was no less embarrassing for Merkel, who handpicked both men but the vacuum created by Wulff's removal from the largely ceremonial but highly regarded presidential office coincides with eurozone crisis rescue talks going in Athens and other European capitals.
Merkel is trying to head off a Greek sovereign default but Greek politics are in turmoil and a default is widely feared.
Merkel has already seen her flank weakened by French President Nicolas Sarkozy's pre-election troubles in France. Sarkozy is battling the lowest approval ratings of a presidential candidate before the vote in French history and may not come through in the April 22 polls, analysts said.
Socialist Party leader Francois Hollande, if elected, will emerge as the new co-negotiator with Merkel in the crisis-ridden eurozone rescue talks in the coming months.
Likewise, Merkel will have to deal with a new occupant of the presidential Bellevue Palace.
The first casualty of the Wulff resignation Friday was Merkel's planned urgent dash, which she canceled, to Rome for talks with Italian Prime Minister Mario Monti Talks with southern European countries facing potential fallout from the eurozone crisis are in a critical stage as Greece faces social unrest, political divisions and the prospect of default.
German media commentators said Merkel's insistence on the choice of Wulff as Koehler's successor had dented her approval ratings and she was now under pressure to choose someone who wouldn't leave her with a new domestic crisis.
Potential candidates in the running include Finance Minister Wolfgang Schaeuble, opposition parliamentary leader Frank-Walter Steinmeier, a Social Democrat, Labor Minister Ursula von der Leyen and East German rights activist Joachim Gauck, whom Wulff defeated in Germany's complex electoral process for the election of a new president.
In his resignation speech Wulff said Germany needs "a president who is supported by the confidence not just of a majority of citizens, but a wide majority."
Deutsche Welle news network said on its Web site Wulff's resignation complicated Merkel's task at a time of urgent need for action on Europe and also the need to have a head of state who could command moral authority.