* Euro squeezes higher, but wariness as ECB policy meeting looms
* Aussie dollar eyes RBA policy review for near-term impetus (Updates with late New York prices)
By Daniel Bases
NEW YORK, Aug 4 (Reuters) - Currencies traded in narrow ranges on Monday against the U.S. dollar, with prices holding up from last week’s recent lows while attention shifts to central bank meetings later in the week.
The euro was holding most of Friday’s gains, although down slightly on the day at $1.3420 by afternoon trade in New York.
On Friday, the robust but lower-than-forecast U.S. jobs report handed the dollar its biggest one-day fall in nearly a month, although it did not temper expectations for the start of the U.S. Federal Reserve’s interest rate-tightening cycle.
Upcoming central bank meetings by the Reserve Bank of Australia on Tuesday, European Central Bank and the Bank of England on Thursday, followed by the Bank of Japan on Friday, will drive much of the trading, rather than U.S. economic data, analysts said.
“We are going to be watching the ECB probably the closest. The policy between the Fed and ECB is diverging, with the U.S. policy moving toward tightening and the ECB moving toward loosening,” said John Doyle, director of markets at Tempus Consulting in Washington.
“The euro was stubbornly strong for many months, but I think the reaction now is justified with its weakening given central bank policy expectations, albeit in slow motion,” he said.
The U.S. currency enjoyed its best month in July since January of last year, feeding expectations it may finally be ready to rally for the longer-term even if there seems to be little fuel for another surge this week.
The Fed is thought to be heading steadily toward a first rise in rates next year, while the ECB may have to battle falling prices with further monetary easing. Overall euro zone inflation in July was just 0.4 percent.
“The dollar has gained a lot in the last few weeks so we were probably due a positioning-led correction,” said Geoffrey Yu, a strategist at Swiss bank UBS in London.
“The inflation report last week did not help the euro but we don’t see any downside catalysts for it (from the ECB) this week. The main interest is whether the dollar can continue this rally.”
The dollar traded off slightly against the yen at 102.54, down 0.07 percent, having stretched last week to a four-month high against the Japanese currency.
The Aussie dollar rose 0.27 percent to 93.33 U.S. cents , from two-month lows of $0.9275 on Friday. After limited reaction to slightly stronger-than-expected Australian retail sales, Aussie bulls will be looking to the Reserve Bank of Australia interest rate meeting on Tuesday.
Sterling gained 0.21 percent on the day to $1.6857. (Additional reporting by Patrick Graham in London; Editing by Catherine Evans and Nick Zieminski)