The US dollar appears to have lost modest ground against its primary currency rivals during short-covering at the end of last week's trading. By Friday's closing hours the EUR/USD was trading above 1.21, and the USD/CAD was near 1.03. The market appears ready for a correction however, but few news events are expected today which may deliver the pressure needed for such a correction.

The Bank for International Settlements (BIS) released a statement on Sunday declaring that while European banks have lowered their reliance on dollar-based assets, there is still a strong need to diversify portfolios even further. The call for diversification is not new, but this study may add pressure to the USD which has seemingly been absent during this period of risk aversion.

Euro zone countries now worry that an over-reliance on the greenback could cause problems at a later date and are seeking other safe havens. The result should be a sell-off of USD in the forex market, which will no doubt help stabilize the European currencies and lift commodity prices somewhat.

In the meantime, today's news events are on the light side. The only significant data will be the euro zone's publication of its industrial production figures. While not typically carrying a heavy impact, they may be the only piece of data the market receives which could influence the majors.