It sure looks like the quid pro quo discussed here earlier in the week of Germany getting the helm of the ECB next year in exchange for a Greek bailout.

The proposed plan would be done within the EU framework but led by Germany. German Finance Minister Wolfgang Schaeuble has discussed the idea in recent days with European Central Bank President Jean-Claude Trichet. Greece is the hardest hit of several countries, including Spain, Portugal and Ireland, that have recently seen their bonds come under pressure amid concerns that they will have difficulty repaying their debts.

This could be a game changer as it suggests that Europe is taking on a de facto political as well as monetary union.

Technical resistance remains at the 1.3850 level. Traders still favor a punt on the short-side based on the technicals but with the fundamentals apparently shifting, play with a smaller than usual position. You can always add to it later if it works out.