FOREX-Dollar dips, euro helped by ECB's wait-and-see approach
(updates, adds fresh quote)
* Yen supported as BOJ begins two-day policy meeting
* Dollar nurses losses as jobs report disappoints bulls
* Euro moves up after ECB's Nowotny comments
LONDON, April 7 (Reuters) - The dollar lost ground against the yen and dipped versus the euro on Monday as U.S. jobs data last week disappointed some who had bet on a number strong enough to break this year's tight trading ranges.
A stronger dollar was to have been this year's big play on major currency markets, according to many banks and investment houses, and there were signs last week the U.S. currency was finally set to break higher.
But non-farm payrolls on Friday was judged short of the decisive evidence of a strengthening recovery that would usher in much higher U.S. interest rates and lift the dollar in the months ahead.
In that context, even the signs last week that the European Central Bank is closer to outright money-printing have failed to shift the dollar significantly higher against the euro.
"At the end of the day we had a number that was right in the middle - enough to keep expectations of tightening by the Fed right where they were," said Simon Derrick, currency strategist with BNY Mellon in London.
"The amazing thing to me, however, is how much people have just looked at the promise of quantitative easing by the ECB and just shrugged."
The euro did take a hit after last week's ECB meeting but on Monday traded at $1.3726, up 0.15 percent on the day.
It was helped by comments from ECB policymaker Ewald Nowotny who said there was no need to act immediately to counter euro zone disinflation.
Another ECB policymaker, Yves Mersch, said that while the central bank was drawing up plans for large-scale asset purchases, it remained some way off.
The euro rose 0.2 percent to trade at 141.70 yen.
But the dollar lost ground against the yen, having gained in the two weeks before Friday's payrolls numbers. It lost 0.6 percent on Friday after the jobs data and was last at 103.24 yen, slightly lower on the day.
There is still the prospect of more money-printing to come in Japan, however, and Monday's moves were limited by caution as the Bank of Japan began its two-day policy meeting.
"(Expected BOJ) inaction could trigger unwinding of yen short positions, which are based on expectation for earlier monetary easing, and heighten upward pressure on the yen temporarily," JPMorgan analysts said in a note.
BOJ Governor Haruhiko Kuroda might come under pressure to take more easing action to support the economy after Japan hiked its sales tax this month.
Data scheduled for Tuesday is expected to show Japan's current account balance swung back to a surplus for the first time in five months in February, helped by overseas investment returns and slowing import growth.
A raft of ECB speakers this week are expected to flesh out the discussions at last week's meeting.
The assumption is that there has been a change in tone, but the jury is still out on whether the bank will ease policy further to weaken the euro and prod growth and inflation higher.
"If you look at (ECB President Mario) Draghi's comments in the past month, the one clear theme is that he is concerned over the euro," Derrick said.
"And if QE has shown us one thing over the past decade, it is that it will work to weaken the currency. It is extraordinary in that context that we have seen so little reaction."
German newspaper Frankfurter Allgemeine Zeitung said the ECB had modelled the effects of buying a trillion euros of assets to ward off deflation. (Additional reporting by Anirban Nag, editing by Nigel Stephenson)