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The German constitutional court said its word about the ESM bailout fund, in a long awaited decision. The judges in Karlsruhe generally enabled the ESM, but set some conditions. A cap €190 billion euros is set. If Germany is to enlarge its liabilities, the parliament must approve it separately.

EUR/USD is initially reacting with a small slide. Update: After the judges concluded their reading, the euro is now on the rise.

Update 2: For now, 1.29 is a cap.

The judges took their time with reading out the decision. EUR/USD fell to 1.2815 before recovering. It is now sliding again in this range.

The German president can now sign the ESM into law. There must be a cap on the ESM. The judges also rejected the complaint against the ECB’s bond buys. Draghi can begin using the OMT.

Peripheral bond yields are falling in expectations that Spain will ask for a bailout and the ECB money will begin flowing.

The decision is critical for the debt crisis, the euro, and the whole global economy. For more on this critical event, see All Eyes on Karlsruhe

EUR/USD was trading on high ground, reaching 1.2883 before retreating. Resistance is at 1.29 and support is at 1.2814 – a line that was stubborn resistance before it was broken yesterday.

For more lines, events and analysis, see the EUR/USD forecast.