Europe - the next shoe to drop?

I have always maintained that the situation for European banks must be as dire as that in the US and yet the ECB has done little compared to the Fed to help out the banking sector. Here comes Paul Krugman, echoing those same sentiments.

The real question is: what are the trading implications? What positions can be enacted to best take advantage of this? Short EUR/USD? What about against a cross like being short EUR/AUD or EUR/CAD? I would prefer the latter, if only that the US Dollar Index seems to be rolling over (see chart below, where uptrend has broken and MACD divergence with higher price but lower MACD).

What about fixed income trade in Europe? Like fixed income in the US, historical volatility is dropping hard and signals like ADX and Bollinger Bands indicate that it should break soon. The only problem is that in this environment it is unclear which way it breaks (I am biased toward lower prices, higher yields).Caution dictates waiting until the market tells us what our position should be.