The Euro continued to hold close to a 2-year low versus the U.S. Dollar as investors consider that the German court which is to decide on the legal usage of the Eurozone Stability Mechanism won’t rule in favor of broader implementation. Under German law, any use other than the original specified in the ESM’s terms are deemed illegal, and without the blessing of the German court the ESM cannot be put into effect.
Market players believe that the Euro will continue to be under pressure, as skepticism has grown in the period which followed the positive outcome of the E.U. summit which ended over a week ago. As one economist noted, market players are quickly learning that policy statements following a productive summit are more a work in progress than definitive edict.
As reported at 12:59 p.m. (JST) in Tokyo, the EUR/USD was trading at $1.2262, not far $1.2225, a 2-year low struck on the EBS trading platform earlier in the week. Analysts say that a break of the low could pave the way for the pair to test $1.1875. The Euro has also slipped against the safe haven Japanese Yen, trading at 97.09 Yen on the EBS platform, before recovering to 97.27 Yen.