Forex Commentary:

The U.S. dollar dropped to a four-and-a-half month low against the euro and slid against most other currencies, too, as investors sought out potentially riskier bets.

The U.S. dollar gained against the yen in the wake of last week’s coordinated currency intervention by the Group of Seven nations to reign in the rising yen.

In late afternoon trading in New York, the euro rose to $1.4226 from $1.4159 late Friday, rising earlier in the day to as high as $1.4242, its strongest level since Nov. 5.

The British pound gained to $1.6315 from $1.6219, while the dollar fell to 97.85 Canadian cents from 98.61 Canadian cents. The dollar was also lower against most currencies from around the world, including the Scandinavian currencies, currencies in Latin America, the South Korean won and the Australian dollar.

Trading Setups / Chart in Focus:

EURUSD

The EURUSD pushed higher today and is approaching the highs set back in November of 2010 near 1.4280. We will watch this level closely as it may act as resistance in the near-term. The trend is clearly up in the EURUSD right now, so rotations lower towards the 8 day EMA could be buying opportunities, pending price action confirmation.

EURJPY

The EURJPY formed a large pin bar trade setup last week after what was a very volatile week of price action in all the yen pairs.

Should price break above resistance at 116.00, we could see another leg higher towards the weekly resistance near 121.00. The conservative course of action here is to wait and see if price really breaks out decisively and then look for long entries on pullbacks back to the break out level or intraday support levels.

For a more in-depth analysis of the major forex currency pairs and price action analysis, please check out my price action Forex course.

Other Markets:

On Wall Street today stocks gained ground for a third consecutive session, with the Dow closing above the 12,000 level for the first time since the massive Japan earthquake sent global markets on a downward spiral

Corporate mergers headlined by AT&T Inc. helped to lift the mood of investors who have been distracted for more than week by quickly-unfolding events in Japan and North Africa.

The Dow gained 178.01 points, or 1.50 percent, the S&P 500 added 19.18 points, or 1.50 percent, and the Nasdaq added 48.42 points, or 1.83 percent.

Upcoming important economic announcements: 3/22/11

5:30am EST: Britain – CPI y/y
5:30am EST: Britain – Public Sector Net Borrowing
8:30am EST: Canada – Core Retail Sales m/m
5:45pm EST: New Zealand – Current Account