LONDON (AFX) - The euro fell in early trade ahead of the release of US economic figures that are expected to shore up predictions of a US recovery, dealers said. "We are expecting today's US jobless claims and business inventories to cement in the view that the US economy is past its worst," Halifax chief currency strategist Steven Pearson said. He said that if this is the case, "there's a real risk that the euro will retest the year's lows". However, 4Cast currency strategist Paul Bednarczyk said: "I have a feeling that the market will still be trading in a narrow range after the US release. I don't think there's too much to look for in the claims or the inventories." Economists are forecasting that initial claims for regular state unemployment benefits fell 16,000 to a seasonally-adjusted 374,000 for the week to Feb 2 after claims rose 30,000 to 390,000 in the prior week. Business inventories are expected to have fallen 0.5 pct in December after declining 1.0 pct in November. Dealers said this morning's lower German retail sales figures for December, the weakest on record since September 1999, were a further negative for the euro. German retail sales fell a nominal 2.9 pct year-on-year for a real drop of 4.1 pct. "The German retail sales numbers were very disappointing. They were horrible," 4Cast's Bednarczyk said. In the UK, sterling is expected to continue to track the euro against the dollar as analysts digest the week's confusing labour market and inflation data. Otherwise, the yen recovered slightly against the dollar after its earlier falls.