Euro May Be Aided By Constitutional Court

News that the German Constitutional Court has reject efforts to block Germany from participating in the guarantees that are a critical part of the Stabilization Mechanism.

While many expected such a ruling, there was a risk that may have weighed on the euro sentiment. This decision coupled with the unlimited 3-month funding by the ECB for the next several months is encouraging short covering.

There are also some rumors that China may move on its currency before June 24 that may also be helping the euro trade higher. Given the recent wage hikes, and the uncertainty about the outlook for Europe, and the new threats from the US Congress, it seems unlikely. Recall the rumors and speculations of an imminent move by China earlier this year proved for naught. This time also sounds suspicious.