The euro gained ground vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2995 level and was supported around the $1.2800 figure. Some traders believe European Central Bank could move rates lower on Thursday on account of a significant pullback in wholesale and retail price pressures while most dealers believe March – Trichet’s important rendezvous – remains the most likely time for an easing. EMU-15 December producer prices fell 1.3% m/m and were up 1.8% y/y, below expectations and the latest evidence of disinflationary pressures in the eurozone. Traders are awaiting German December manufacturing orders and industrial output data with many expecting the data to evidenced an unprecedented decline. German government officials are convening tomorrow to discuss a possible market stabilization law that could be circulated as early as next week. German data saw December retail sales decline 0.2% m/m and 0.3% y/y. In U.S. news, the effective average interest rate on U.S. federal funds reached a two-year high at 0.24% yesterday. Data released in the U.S. today saw December pending home sales increase 6.3% to 87.7, beating expectations of a pullback. Euro bids are cited around the US$ 1.2475 level.