Covering short euro positions now is one thing. Taking long positions in the single currency is entirely another.
It is why this little euro rally won’t last. The latest bout of short-covering is hardly surprising given the extreme level of speculative short positions, talk that Germany may yet allow Spain to get a soft bailout and signs that major central banks may start to ease policy again.
It is the two “mays” on which euro buyers really need to concentrate.
The latest twist in the Spanish saga has Germany relenting to international pressure to come to Spain’s rescue before the country’s banks start falling apart.
The story goes that rather than providing the full standard bailout with all the fiscal bells and whistles that have helped to put the Irish and Greek economies through the wringer, Madrid would get a special deal with less-insistent economic monitoring.
This rescue program-lite may help save Spanish banks for now, but uncertainties abound.
Will Germany, and the International Monetary Fund for that matter, really go along with it? How will Ireland and Greece react if Spain gets special terms?
How much does Spain need? The €40 billion ($50.3 billion) Madrid suggests it can get away with? Or something more like double that, which the IMF could suggest once it has completed its review of the banks on Monday.
Even if Spanish banks do get rescued, is that any reason to suggest that the rest of the European banking system is now safe and sound?