The dollar continued to recover some of yesterday's sharp losses as the market awaited this afternoon's batch of US data. The dollar fell more than 1 pct against the euro yesterday on rumours that the US administration wants to actively encourage a weaker dollar amid speculation about possible replacements for Treasury Secretary John Snow. Today will see the release of the US PCE deflator -- a key measure of inflation -- and the University of Michigan consumer confidence survey. The Chicago purchasing managers index and US factory orders data are also due for release. The US currency gained last week after the US Federal Reserve Open Market Committee signalled that further interest rate hikes are likely, although the extent and timing of future tightening will be dependent on the outcome of US data. The euro also remained firm following hawkish comments from European Central Bank president Jean-Claude Trichet and after the euro zone economic sentiment survey hit its highest level since mid-2001. Euro zone annual HICP inflation slipped to 2.2 pct in March from 2.3 in February as expected, but remains well above the ECB's target for a rate just below 2.0 pct and continues to suggest that further rate hikes are on the cards. Speaking today, Trichet warned about high wage growth in the euro zone, arguing that some countries are losing competitiveness as a result. Elsewhere, the pound remained steady. The latest GfK NOP survey on UK consumer confidence earlier today came in below expectations, but will not alter expectations that the Bank of England will steadfastly hold interest rates at 4.50 pct in the near term. GfK NOP said its main consumer confidence index dropped to -7 from -4 in February, below analysts' expectations for no change at -4. "Consumer confidence is faltering anew, which does not bode well for spending in the near term at least," said Howard Archer at Global Insight.