The euro has managed to erase all of its morning losses, helped by the general resurgence in risk appetite that has materialised today, and by a general sense of optimism about the eurozone crisis that has steadfastly ignored all evidence to the contrary.

Throughout the morning, the single European currency has gained on reports that the eurozone will be able to boost the strength of the EFSF rescue fund, even though several policymakers, including the economic minister of Spain, have said that no discussions on expanding the fund have taken place. Still, for now, everyone is getting excited about a possible solution to the crisis, with a firewall being constructed around Greece to prevent further contagion into Spain and Italy. With little eurozone data out today, the focus has remained on officials and politicians ahead of the German vote on Thursday.

Tensions in the Bundestag appear to be bubbling to the surface, with the smaller parties in Angela Merkel’s coalition becoming increasingly angry about the discussions that are taking place. Both have threatened to vote against the government in Thursday’s vote, a move that would have severe repercussions (since without German ratification, the eurozone agreement of 21 July cannot come into effect). To add to this, the president of the German Constitutional Court has warned that further transfers of power to Brussels would require a referendum in Germany on the creation of a new constitution. All this underlines the fact that the eurozone can continue to meet and discuss all it likes, but the real future of the euro lies in Berlin.