AUD/USD Daily Char

The AUD/USD is merging following a crack in the support at 0.9860, which dates back to December 2011. The trend is still bearish with an indication of lower highs and lower lows. In the meantime, the force has been unrelenting, replicated by the RSI analysis remaining beneath 60 and labeling 30 all through AUD/USD’s May-turn down.

As the week kicks off, the AUD/USD is fundamentally merging within 0.98 and 0.9880 levels, even though price movement seems to be in a small congestion. The RSI analysis is not yet oversold, and it remains at an impartial ground, set for a new leg down. But in case the RSI pushes over 60, it will break the unrelenting bearish force.

In this optimistic breakout situation, correction targets the 0.9950 level, close to highs since the last consolidation zone on top of support of the consolidation region before that. Any break over 0.9950 will open afresh the 1.00-1.0020 spin around area.  In case the market breaks lower than 0.98, the most likely support will be 0.9660.

A political showdown is expected in Europe on Wednesday over the need to use Eurobonds to support Euro Zone following the expected destabilizing exit of Greece from the currency union.

During the forthcoming informal meeting on Wednesday, the EU leaders are expected to agree on the best growth and financial pacts in order to strengthen recovery. But there seems to be a major rift within the union over Eurobonds which are the main proposal.

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George Osborne has warned that the richest Euro zone members will have to offer support to the weaker and indebted nations or else the currency union collapses.

In his report that was published in the Sunday Times, the Chancellor noted that if the wealthier nations in the Euro zone do not support the weaker ones then the union is likely going to collapse.

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Bild newspaper has reported that Chancellor Angela Merkel did not push for the idea that there should a referendum on Greece regarding its membership in the currency union saying that she only sought to know what the Greek president thought of it.

Although Berlin denies it, a Greek government spokesman confirmed that Chancellor Merkel brought up the topic in a phone call on Friday.

The occurrence reignited anti-Merkel attitude in debt-loaded Greece with many people accusing her of exacerbating the predicament by taking to long to act and requesting for very high austerity measures.

The chancellor’s spokeswoman denied the reports that Merkel had proposed a referendum in Greece. She however did not provide details of whatever had been conversed.  Paul Ronzheimer, a reporter at the Bild Newspaper, reported that Angela Merkel had asked the Greece president what he thought of a referendum on the currency union in a phone call.

The article’s headline read “Bild at a negotiating table in Greece”. Many are forced to believe that the reporter was there during the chat. However, the journalist confirmed that he wasn’t present but he got the details from other reliable sources.

The reporter wrote that Merkel sought to discuss with the Greece president about the likelihood of a referendum on the currency union. He also noted that the idea had come from the EU finance ministers meeting in the last couple of days.

The Bild reporter also said that Merkel sought to know Papoulias’s stand on the idea but he rejected it.

German government officials have also noted that the Chancellor hoped for a stable government in Greece after repeat voting in June. Germany has been playing a major role in an effort to rescue Greece.

Dimitris Tsiodras, Greek government orator, noted that after the phone call Merkel had specifically brought up the issue of a possible referendum on the membership of Greece in the currency union.

He also said that the German Chancellor had mentioned to the president about the idea of a referendum in line with the debate on whether Greece wishes to stay in the currency union.

These reports have sparked Greek criticism of the Chancellor who recently was cartooned in some Greek papers putting on a Nazi Uniform. The recent controversy appeared across the front page of nearly every Greek newspaper.

However, Panagiotis Pikrammenos, Greece interim Premier told reporters that the controversy is now over.

EUR/JPY- Our position on EUR/JPY stays lower following its continued weakness and an indication of further declines. This puts forward that further price increase could see EUR/JPY going for the 100.00 point, its psycho stage. A twist beneath this point would make the pair weaker and force it to the 99.23 level where an infringement will suggest a run to the 98.54 level. Its daily RSI remains weak and indicating lower supporting this outlook. On the positive side, the cross must break and hold on top of the 104.60 level in order to overturn its bear pressure and bring more recovery in the direction of the 106.23 point where a violation will focus on the 107.99 point. Further out, downtrend remains at the 111.42/52 points. Any movement above these levels will recommence its broader average term uptrend en route for the 112.34 point. On the whole, EUR/JPY maintains its hold on to its downside susceptibility.

GBP/USD: There are speculations that a bearish trend will surface in the near future following a sell off of the pair and a break beneath its medium time growing trend level.  Further weakness of the pair will force GBP to target the 1.5805 level. The violation of this level on April 5^th will cause more drop towards 1.5642/53 levels.   A break at this level will try to go to the 1.5497 level, its highest since January 2012. Its daily RSI remains bearish showing signs of dropping further. But the pair can also stop its bearish trend and work towards returning to the growth trend line. This aims at reaching the 1.64451 level. Any rise above this level will target the 1.6293 level. Further out, drop remains at the 1.6451 level. Generally, the pair goes on to cling to its downside force.

David Cameron has expressed his concern about the Euro warning that the single currency is on the verge of collapsing as the economic turmoil draws anticipation of a fresh meltdown.

The Premiere is expected to give a speech today in which he warns the Euro zone leaders that the single currency is at crossroads. He also vows to do whatever he can to save the country.

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EUR/AUD Daily Chart

There has been some notable improvement in the EUR/AUD pair since it has moved from 1.2130 to around 1.2920 since Feb 2010. Noteworthy is the fact that this improvement is just beneath 50 percent retracement of a downtrend in the period between Nov.2011 to February 2012. It moved from 1.3805 to about 1.2130. It is also important to note that the 1.2920-1.3015 level indicates support of stagnant prices in the period between July and December 2011 when the support collapsed.

The market is currently bearish with resistance around 1.2920, which creates a divergence with RSI in the chart. This indicates a slowing uptrend and draws speculations for a range-bound market, at least, if not the reverse. The Marketing is still testing a growing trend line since it is now breaking beneath 1.28. Further break beyond this level suggests topping, and the likelihood of a reversal. Right now a break beneath 1.2750 is required in order to end some near-term support along with the increasing trend line.

EUR/AUD 4H Chart

According to 4H chart, a break beneath 1.2770 indicates a break out of a topping pattern. In case the 1.2750 is cleared, it would also do away with the trend line and the 4H 200SMA. And in case this top succeeds a pullback to move back over the 1.28 level will be impossible. Anything beyond 1.2850 suggests that it is time to forget the bearish outlook. Considering the daily trade chart, a break beneath brings forth the 1.2570 pivot. And beneath 1.2550, we get the 1.2130.

The slowdown in China continues to weigh on the Australian dollar, while the Euro remains the main focus especially due to the crisis in Greece.

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Prepare yourself for some amusing talk!

• Merkel: Very rigorous European program ahead
• Merkel: France and Germany know the role of Europe
• Working in harmony before May, June EU summits
• Work on financial and growth deal continues for June meeting
• She and Hollande require Greece to remain in Euro; united offers to assist Greece
• Greece must support Troika conditions to be given aid

Hollande:

• Cites companionship involving France and Germany
• Wants to indicate faithfulness of Franco-German ties
• Wants to join hands with Merkel and others to support the bloc