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Talking Points:

- EURUSD narrows into range between 1.3335 and 1.3440.

- GBPUSD tests downtrend from 7/15 and 8/6 highs after gap higher.

- August is a seasonally favorable month for the US Dollar in the QE era.

The US Dollar has cleared out some of the short-term overbought conditions in a few key technical indicators, but there are several factors in play that could keep a lid on prices until tomorrow. On an event-basis alone, truly significant US economic data doesn't hit the calendar until tomorrow.

Instead, there are several competing factors at work keeping EURUSD pinned lower. Among them: interest rate differentials, especially among peripheral sovereigns; liquidity conditions; one-sided non-commercial/speculative positioning; persistently disappointing economic data; and the overhang of additional easing.

These factors are explained in greater detail in the weekly trading forecast section, "Euro’s Potential Capped as Regional Growth Grinds to a Halt".

For the GBPUSD, the downtrend from the July 15 and August 6 highs is currently being tested but amid a low volume environment - there were few significant geopolitical headlines over the weekend and there's little data on the calendar - it's likely that any good shot at a breakout will have to wait. Tomorrow, both the UK and US Consumer Price Indexes will be released, which should stir prices some.

Read more: USDOLLAR Clears Resistance but for How Long?

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