As we move closer to tomorrow’s ruling by the German Constitutional Court, the EUR remains in a consolidative state. Tomorrow the court will rule on whether the participation of Germany in the ESM (European Stability Mechanism) EUR 500 billion fund is constitutional. This fund will offer loans to Eurozone member countries could buy their bonds to ease the cost of borrowing. The market is expecting a positive ruling from the court and if the ESM “passes”, most analysts consider this to be EUR positive. There had been an earlier concern that the court might delay their ruling, but this was dismissed earlier during this trading morning and the court said it will rule on Wednesday as planned. Guest post by Matthew Lifson, Foreign Exchange Trader, Market Analyst of Cambridge Mercantile Group. There is always the chance that the court might not ratify the ESM treaty, but this is doubtful. At the present time, Germany is the only country that has not ratified the treaty. While most believe there will be a positive action by the court, there is concern that they could add some additional language as to how the fund might function moving forward. Whether or not this added language could prove negative to the EUR remains to be seen and it depends on how the statement is written. Apparently the after effect of ECB President Draghi’s comments last week are strong enough to counter the problems that seem to be coming from Greece. PM Samaras has failed to get agreement from his coalition partners on the EUR 11.5 billion of fiscal reductions that are required by the “troika” to secure the next tranche of financial assistance. Normally this news would send the EUR lower, especially as these talks seem to have spilled over to Spain’s problems. PM Rajoy still seems on the fence regarding requesting a bailout for Spain, but he did say that the bailout conditions seem reasonable. He said again he will request a bailout if he feels it is necessary for the country. He is concerned about the possibility of cutting pensions as he believes “the pensioner is the country’s most fragile person”. Once the market digests the ruling by the German court, it will immediately turn its focus towards the two day FOMC meeting that begins tomorrow. The meetings conclusion on Thursday will include their announcement about interest rates and whether or not there will be added easing (QE3) by the FED. While I have stated earlier that I think the FED will hold off on any QE3 announcements, the markets will also be looking for any clues as to what type of easing if any will be implemented. The FED will also release new economic projections and most expect them to extend the low rates into 2015. The currencies remain within their overnight ranges to this point, but the underlying feeling at this point is USD negative. Risk currencies remain strong and that should continue throughout today. Asian stock markets were mixed overnight, while European equity markets are lower in early trading. DOW Futures are slightly positive indicating a upward move to the US equity markets at their open this morning. Eleven years ago I was on a flight from Newark to Pittsburgh, returning from a business conference in NYC, as the first plane hit the North Tower. A day that changed the world as we know it. We will always remember that day. Let’s all take a moment to today to remember and honor the memories of all that perished that day. Further Reading: All Eyes on Karlsruhe Matthew Lifson Matthew Lifson Matthew Lifson is a Foreign Exchange Trader and a Market Analyst. with Cambridge Mercantile Group. View All Post By Matthew Lifson Other Forex Stuff share Read Next EUR/USD Sep. 11 – Steady as ESM Decision Looms Kenny Fisher 10 years As we move closer to tomorrow's ruling by the German Constitutional Court, the EUR remains in a consolidative state. Tomorrow the court will rule on whether the participation of Germany in the ESM (European Stability Mechanism) EUR 500 billion fund is constitutional. This fund will offer loans to Eurozone member countries could buy their bonds to ease the cost of borrowing. The market is expecting a positive ruling from the court and if the ESM "passes", most analysts consider this to be EUR positive. 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