The dollar remained steady below its recent nine-month highs against the euro as investors exercise some caution ahead of this afternoon's US economic data. Analysts said US retail sales and producer price data may come in on the soft side. They expect the core PPI rate in May to drop to 0.2 pct from 0.3 pct in April, and retail sales to slip 0.2 pct from the 1.4 pct improvement the previous month. "I think the dollar's losing a little bit of momentum and investors are just taking a bit of a breather, especially ahead of today's data," said Audrey Childe-Freeman, an analyst at CIBC World Markets. A combination of dollar supporting factors pushed the euro down to 1.2036 usd yesterday, its lowest level since Sept 8. The dollar's surge to near nine-month highs came as investors fretted about the political future of the EU following the rejection of the EU constitution by both France and the Netherlands, and the current acrimony surrounding the future of the British rebate. The US currency has also been buoyed by better-than-expected news on the US twin deficit front and expectations that the interest rate differentials between the US and the 12-nation euro zone will widen further in the coming months. "The dollar appears to have lost momentum because a lot of news now appears to be priced in," said Mansoor Mohi-uddin, currency strategist at UBS. "The markets are expecting a negative result when the EU heads of government meet later this week, the markets have also shifted towards pricing in ECB rate cuts and investors continue to be concerned about the weakness of the euro zone against the US economy," he added. Elsewhere, the pound has been buoyed by a relatively hawkish message from the Bank of England's governor Mervyn King last night, which has dampened expectations of an imminent rate cut, despite a weaker than expected house price survey from the Royal Institution of Chartered Surveyors. Today's higher than expected CPI inflation data for May acted with the market's prevailing interpretation of King's speech. While acknowledging the risks of a sharper than expected consumption slowdown, King warned of the upside risks to inflation, stemming from a variety of factors, including accelerating money supply growth, rising import prices and a tight labour market. "The pound has managed to regain its losses as May CPI came out higher than expected and King was seen as being more hawkish on rates," said UBS's Mohi-uddin.