Forex Commentary:

The euro touched a three-week high against the dollar on Tuesday amid hopes that Greece may avoid a debt restructuring, but further gains are likely capped by technical resistance after a weak monthly performance.

In late afternoon New York trading, the euro was up 0.8 percent at $1.4390, below resistance at $1.4454, the 50 percent retracement of this month’s fall from nearly $1.50.

The U.S. dollar index, which tracks the greenback against a basket of currencies, traded 0.5 percent lower at 74.611. It is up about 2.3 percent in May, its best monthly performance since last November.

Trading Setups / Chart in Focus:

NZDUSD

The New Zealand dollar reached a 26-year high against the U.S. dollar Monday on the back of better-than-expected trade figures.

The New Zealand dollar was worth $0.8235 as the New York FX session came to an end today, the highest level since the country abandoned exchange rate controls in March 1985, allowing the currency to trade freely. The previous post-float high was $0.8215.

We can see in the chart below the fresh 26-year high made today in the NZDUSD. Also, there was a very obvious inside pin bar trading setup that occurred back on May 25th which clued savvy price action traders into the possibility of an up move. Some of our members in the forum caught this price action setup.

Prime Minister John Key said the New Zealand dollar was trading at high levels against the U.S. currency “because of inherent weakness in the U.S., the size of the deficit in the United States … and the enormous amount of debt that that economy is producing.”

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

Other Markets:

On Wall Street today stocks posted a 1 percent rally as bulls took the upper hand on the back of hopes for a new plan to deal with Greece’s debt crisis. However, poor economic data suggests hurdles ahead as the S&P 500 ended its worst month since last August.

The Dow gained 128.21 points, or 1.03 percent, the S&P 500 added 14.10 points, or 1.06 percent, and the Nasdaq rose 38.44 points, or 1.37 percent.

Upcoming important economic announcements: 6/1/2011

3:15am EST: Switzerland – Retail Sales y/y
4:30am EST: Britain – Manufacturing PMI
8:15am EST: United States – ADP Non-Farm Employment Change
10:00am EST: United States – ISM Manufacturing PMI
9:30pm EST: Australia – Retail Sales m/m
9:30pm EST: Australia – Trade Balance