The dollar gained ground against the yen and the euro on Tuesday, ahead of data that could shed light on the strength of the U.S. economy and the future path of interest rates. The dollar has been under pressure so far in 2006 on a perception that the U.S. Federal Reserve's 18-month monetary tightening cycle will soon end. But analysts said this view is not yet firmly entrenched in the market. "In general terms were are still in a $1.20/1.21 range for euro/dollar ... but the focus is moving away from concerns that the U.S. economy is slowing," said Michael Klawitter, currency strategist at West LB in Duesseldorf. By 1257 GMT, the dollar was up a quarter of a percent at $1.2086 per euro and 115.14 yen . Data due this week will yield more clues on the health of the U.S. economy and the outlook for U.S. interest rates, beginning with industrial output at 1415 GMT on Tuesday. Trading was choppy in relatively thin volumes before U.S.-based traders return to their desks after a public holiday on Monday. "The market keeps turning on itself and people are focused on day trades," said a trader at a UK bank. Some traders said a sharp fall in Japanese share prices hurt the yen. The Nikkei share average <.N225> lost 2.8 percent. Sterling fuelled dollar strength after sliding on data that showed UK consumer price inflation falling back to the Bank of England's 2.0 percent target in December. While the figures matched economists' forecasts, traders said on-target inflation left often the door to a UK interest rate cut this year. Sterling was down almost half a percent against the dollar at $1.7626