EU FINANCE ministers followed a deal to open draft budgets in Brussels before parliament with an agreement to give new audit powers to Eurostat, the European Commission's statistical arm.

As economics commissioner Olli Rehn indicated, Bulgaria would be the first country to face a Eurostat audit. He said the EU executive will next month publish proposals to flesh out a call for earlier financial sanctions when the euro rulebook is strengthened.

With new sanctions a core component of the agreement made on Monday night, some EU governments are already pushing for automatic penalties to ensure adherence with the fiscal rules which underpin the currency.

"We're of the opinion that these sanctions have to kick in automatically," said Luxembourg's finance minister Luc Frieden as yesterday's meeting ended. "If they were to be subjected to a political assessment, there would be too much of a risk of some states being treated different from others."

Mr Frieden's remarks imply that prime minister Jean-Claude Juncker, president of the euro group of finance ministers, wants the removal of political discretion from a new sanctions regime.

Eoin Treacy's view Countries are being pressured to surrender decision making powers from their national budgets. Henry Ford's words come to mind "You can paint it any colour, so long as it is black" because Eurozone countries, particularly those with the greatest need to stabilise their finances, can do whatever they like so long as they close their deficits which in effect means cutting spending and raising taxes. The need for greater alignment in fiscal policy is essential if the Euro is going to survive and incidentally achieves many federalist objectives without the need to put such developments to a popular vote. Once this crisis has run its course, I suspect populations currently reasonably accepting of the need to align fiscal policy will be more resistant once they realise it is a permanent arrangement.

This fudging of the basic criteria needed for a currency union will remain a long-term issue for the Euro. Despite the policy initiatives being proposed, EU countries are not recalcitrant children but sovereign states. It appears to be only a matter of time before some begin to assert greater independence. I still do not see how a country can be compelled to pay sanctions levied on it by the European Commission. What is to stop one from simply refusing and initiating another Euro crisis? The call for the sanction process to be made automatic and outside political influence sounds appealing but unlikely in an EU context and even if it were automotive, how is a non-compliant or fraudulent country going to be compelled to pay?

These are longer-term questions. The move towards greater fiscal cohesion allays an existential question about the integrity of the Eurozone. It may not yet survive with all its member states in tow but the balance of probabilities remain with the currency union's continuity. The Euro Trade Weighted Index has experienced significant technical deterioration but has also become really quite overextended relative to its 200-day MA. Some further downside is a possibility but the likelihood of a technical bounce has risen substantially. However, even in such an event some support building is probably required before significantly higher levels can be justified.

Eurobunds have rallied for eight of the last nine weeks but have paused below 130 for the last 10 days and are overextended relative to the 200-day moving average. Yields have fallen precipitously to test the psychological 2.5% and have steadied somewhat. Acceleration is a trend ending of undetermined duration, as taught at The Chart Seminar, and while this is the one major inconsistency currently evident on the chart, I wonder how much higher Bund prices can go without a further significant deterioration of sentiment towards the Eurozone's debt issues. At the very least a reversion towards the mean has become increasingly likely.