The rally in EUR/USD in recent days has less to do with the market making a judgement on whether the Draghi Plan will work and more to do with the fear on the part of shorts that Europe will get its act together just long enough to put a hurtin’ on the shorts.

You need look no further back in time to the end of June when EUR/USD rallied to nearly 1.2700 after the EU summit.

Did that summit solve the problem? No. But it did show a shift in the balance of power from the German-led core to the Italian-led periphery. We subsequently fell to lows for the year at 1.2042 within weeks, but not before spanking the shorts.

Will the Draghi plan to lower sovereign yields in the periphery solve all the euro zones problems? Unlikely. But it will buy the euro zone more time to move toward fiscal union, which will be the ultimate game-changer. It takes the risk of a chaotic breakup of the euro zone off the table and delays the day of reckoning, again. It could be an uncomfortable few weeks ahead for those short of EUR/USD. Some had priced in the very worst, a euro break up, and they look likely to be disappointed near-term.