Draghi Inflation Will Hold above 2 Throughout 2012

Draghi: Inflation Will Hold above 2% Throughout 2012. The ECB Governing Council announced yesterday that the main interest rate will remain unchanged in April at the record low 1.0%. During a press conference following the announcement president Mario Draghi repeated last month’s forecast that inflation will stay above 2% this year and it will decrease below this level in 2013, while the pace of monetary expansion remains subdued.
EUR/USD
Range: 1.3137 – 1.3164
Support: 1.3135
Resistance: 1.3160

Euro-dollar closed in NY at 1.3140 after recovering from session lows of 1.31072. The rate eased back to mark early lows in Asia at 1.3136 before resuming its recovery. Offers placed to 1.3150 again provided resistance, but fresh demand emerged to trigger weak stops above this level with rate eventually able to claw its way up to overnight highs of 1.3158. The rate settled between 1.3145-1.3155 ahead of the European open but underlying tone remains buoyant. Offers now seen into 1.3160, a break to open a move to 1.3180, followed by 1.3200. There was a strong option defence ahead of a reported barrier at 1.3100, bids seen placed between 1.3135-1.3125, a break to expose that 1.3100 area.

GBP/USD
Range: 1.5894 – 1.5908
Support: 1.5880
Resistance: 1.5910

Cable closed in NY around 1.5890, after the rate had bounced back from traded lows at 1.5833 to a session recovery high of 1.5895. The rate resumed its recovery tone into Asian trading, the rate pushing to a high of 1.5909 before settling between 1.5895-1.5905 ahead of the European open. Moves through Asia were basically led by euro-dollar as euro-sterling consolidated Wednesday’s losses, the cross extending recent lows to 0.8262, with trade overnight contained within 0.8265-0.8273. Position adjustments expected ahead of the long Easter weekend break. Offers at 1.5910-1.5920 then 1.5950, followed by 1.5975-1.5980. Bids in place at 1.5880-1.5870, 1.5850 and 1.5835-1.5830.
Gold
Range: 1,620.26 – 1,626.97
Support: 1,612.40
Resistance: 1,636.25

Gold is trading around 1,623.50 in Asia in quiet trade ahead of the long weekend. The metal suffered another sharp fall yesterday as risk off sentiment grew in Asia and Europe on concerns over Spain, and was compounded by a poor Spanish bond auction and comments from ECB’s Draghi. Further comments from the US that QE3 now appears to be off the menu has taken the shine of gold this week and the metal dipped another $35 yesterday to add to the $42 it lost on Tuesday following the release of the FOMC minutes. Gold hit lows of 1,612.40 in NY yesterday which now forms the first level of support. A break here points down to the 1,605-1,600 levels which should hold stronger demand. Resistance is seen up at 1,636.25 and 1,648.10.