Court of Germany vs ECB. There will be no favor for buying selected assets.

Only a few weeks ago in our website we mentioned conflict between the European Central Bank and Germany. However, moving to the merits of the case, which was the issue of joint bonds, financing mainly the already heavily indebted Italy and Spain, the Court of Germany found this form of financing contrary to the law in force in its own country. This decision resulted in a reaction from the Bundesbank, which was announced to withdraw in the next three months from any financial operations carried out alongside EBC. After such harsh statements about the conflict, it was no more heard. It expired with strong opposition from Germany. Today, however, the topic returns like a boomerang. One of the reasons for the renewed interest in the topic is a strong Community currency.

Court of Germany versus ECB

In accordance with the above test, which described this conflict more broadly, we assumed that the ECB would not lead to its spread. As a result, the desire for settlement by the European Central Bank no longer surprises. He is ready (as is clear from a recent statement) to hold talks in this regard due to the fact that this conflict may seriously threaten Germany's participation in planning "post-virus" support packages.

The ECB will not be the navel of the world

The Court of Germany has made it very clear on issues not very convenient for the ECB. He proved that the European Central Bank did not respect the principle of proportionality of its purchases in the form of various assets. The court ruled that the purchase program proposed by the ECB is incompatible with EU treaties. Now all attention is focused on the 3-month period during which the EU central bank must adapt its current activities to the relevant regulations / Lagarde is peaceful and (as can be seen from its comments) will endeavor to mitigate the inconsistencies as best as possible.

Euro like a fish in water

This situation is quite good in terms of the European currency. All purchasing programs usually operate "proactively", creating additional demand for EUR. Potential uncertainties related to the return of the epidemic are the biggest obstacle to a longer persistence of the EU currency in the wave of appreciation. For now, as can be seen from the attached chart, we are still in strong upward sentiment

Chart EUR / USD, H4 interval. Source: xNUMX XTB xStation