* Euro back above $1.3600 after volatile session
* ECB cuts deposit rate to -0.10 pct, refi rate to 0.15 pct
* U.S. non-farm payrolls next event risk
(Adds comments, adds prices)
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, June 6 The euro held steady on
Friday after a dramatic rebound from a four-month trough the
previous day as investors booked profits after the European
Central Bank eased policy in a long-anticipated move.
The euro last traded at $1.3659, having recovered
from a trough of $1.3503 set on Thursday shortly after the ECB
cut interest rates to record lows, taking its deposit rate into
negative territory for the first time.
The ECB also launched a series of measures to pump money
into the sluggish euro zone economy and pledged to do more if
needed to fight off the risk of Japan-like deflation.
But the market, which had long expected action from the ECB,
was quick to lock in profits in a move that triggered a squeeze
on short positions.
That saw the euro roar back from Thursday's four-month low,
and with the ECB meeting out of the way, some market
participants said the single currency's downside may be limited
in the near term.
With its initial drop on Thursday, the euro may have seen an
interim low that could hold over the next few weeks, said
Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.
Asked for his stance on the euro, Halley said: "It's buy
dips to $1.3600 looking for a squeeze to $1.3800."
A risk to this view would be if any remarks from ECB
policymakers were to strengthen market expectations for
full-blown quantitative easing by the ECB, he added.
Some analysts believe the euro could resume its downtrend
fairly quickly. Analysts at BNP Paribas recommended selling the
euro at $1.3620 to target a move to 1.3200, with a stop at
"EURUSD has squeezed higher after the announcement but we
think this is an opportunity to add to shorts," they said.
The rebound in the euro weighed on the dollar index, which
measures the greenback's value against a basket of major
currencies. The dollar index last stood at 80.349, down
from Thursday's four-month peak of 81.020.
Against the yen, the dollar eased 0.1 percent to about
"For the euro, it was the usual 'buy the rumour, sell the
fact' story," said Emma Lawson, strategist at National Australia
Bank in Sydney.
Lawson said the "risk on" market the ECB created was dollar
negative across the board.
Indeed, higher-yielding currencies such as the Australian
and New Zealand dollars had gained a lift on Thursday after the
ECB unveiled its monetary easing measures, while emerging Asian
currencies were broadly firmer on Friday.
The ECB's easing measures are likely to create a helpful
tailwind for emerging markets, analysts at Barclays said in a
"We see a good opportunity to enter into EUR-funded longs in
select high yield currencies," they added.
The Australian dollar eased 0.1 percent to $0.9334,
after having risen 0.7 percent on Thursday. The New Zealand
dollar slipped 0.1 percent to $0.8493, after climbing
0.9 percent on Thursday.
The next focus for markets is the influential U.S. jobs data
due later on Friday.
Analysts polled by Reuters expect U.S. employers probably
added 218,000 jobs in May, a step down from April's 288,000 job
gain. But estimates are even wider than usual, ranging from
110,000 all the way to 325,000.
(Editing by Shri Navaratnam & Kim Coghill)