LONDON (AFP) - The dollar clung to gains against the euro sparked by an unexpectedly strong reading in a regional index of manufacturing.
The single European currency stood at 1.2151 dollars in early European trading Thursday, unchanged from late on Wednesday in New York.
The dollar slipped to 109.74 yen from 109.99 on Wednesday.
The US unit posted strong gains after the Empire index -- a measurement of manufacturing activity in the New York region -- came in above expectations Wednesday.
But analysts warned that if the next set of data turned out to be negative then the US currency could be on the backfoot.
"The US data calendar will once again be the key driver for intraday forex moves," Dresdner Kleinwort Wasserstein analysts said.
"Following yesterday's stronger-than-expected Empire manufacturing number, the implied market expectation is probably above the official consensus suggesting some scope for disappointment," they cautioned.
Investors were awaiting US consumer price data for signs of whether inflationary pressures have eased, particularly after Friday's disappointing producer prices figures.
US weekly jobless figures were also on the menu, followed by key data on US capital inflows for July.
The spate of figures contained "plenty of risk" for the dollar, which will "do very well to maintain its recent bullish tilt", said Steve Pearson, currency analyst at HBOS.
Sterling meanwhile gained on news of an unexpected 0.6 percent rise in British retail sales in August.
"The relatively strong rebound in retail sales volumes in August, after July's drop, indicates that recent reports of the death of the consumer may be premature and reinforces our belief that the Bank of England will still raise interest rates by 25 basis points in November," said Howard Archer, economist at consultancy Global Insight.
The euro was changing hands at 1.2151 dollars, unchanged from late on Wednesday in New York, 133.34 yen (133.67), 0.6813 pounds (0.6838) and 1.5429 Swiss francs (1.5426).
The dollar stood at 109.74 yen (109.99) and 1.2695 Swiss francs (1.2697).
The pound was at 1.7837 dollars (1.7767), 195.73 yen (196.51) and 2.2641 Swiss francs (2.2554).
On the London Bullion Market, the price of an ounce of gold stood at 404.65 dollars against 404.45 dollars late on Wednesday.