What's up with EURO?

Here's a look at the EURO Index chart. The index seems to have completed an ABC correction from 123.75 high to 102.13 low with a wave A = wave C extension. From the 102.13 low posted in June this year, the index has moved up in 3 waves which could easily be a 3 wave correction before further down side below the summer low. There's extreme bearish sentiment in EURO right now owing to the problems in Greece and Ireland and potential problems with Belgium and Spain. The market might be blind sided to the bearish view that any positive news coming out of the EURO zone can spark a sharp rally. In the big picture, there's a possibility that the ABC correction that ended this summer might have been a large wave 4 with a potential for a multi-month wave 5 rally.
What possible fundamental factors could drive a wave 5 rally?
1) Market has already factored in majority of the bad news coming out of the EURO zone.
2) The problems with USD (all the QE) might be much larger compared to the woes of EURO
3) Strategic balancing of foreign currency reserves by China by shifting partially from USD to EURO

On the contrary, It's possible EURO can go south badly from here if what we know is just tip of the iceberg and the potential problems with Spain and other constituents of EURO are much larger than initially thought of.

Right now I'm favoring a rally in the EURO. It will change if the 102 level in the index is broken.