Which way does risk aversion cut when market is long dollars

Headlines this afternoon suggest a foreign component to the failed bombing attempt in Times Square over the weekend.

Typically, the dollar is the safe-haven, but in this environment, with the market already heavily short EUR/USD, my guess is if terror concerns prompt traders to seek safety, they will square EUR shorts first and ask question later.

EUR/USD trudged as high as 1.3215 before easing off to the 1.3200 level.