* Euro unmoved by ECB decision, flat after dip in Asia
* News conference eyed for signals on policy easing
* Yen sets fresh 10-week low versus dollar
* Non-farm payrolls key to further dollar gains
(Adds new quotes, updates prices)
By Patrick Graham
LONDON, April 3 The euro held broadly steady on
Thursday after the European Central Bank kept interest rates on
hold, with eyes fixed on the bank's news conference for signs of
whether it is any closer to taking other steps to boost growth.
Unlike in January and February, there had been few if any
mainstream voices in the market predicting action from the bank
in the form of a cut in its official interest rates and there
was little reaction when it held fire.
Some still saw a chance that President Mario Draghi's news
conference at 1230 GMT will yield a sign that the bank is edging
towards steps to push more cash into the economy. But any actual
action this month on that front too is seen as an outside bet.
The euro dipped just before the decision but took back those
losses immediately after the decision.
"We did see a quick swing (for the euro) around the
decision, some people clearly were trying to use it but that
quickly died," said Alvin Tan, a strategist with SG Bank in
London. "We don't expect too much from Draghi at the meeting
either, the bank still looks pretty comfortable with the
disinflation we have seen."
A number of ECB policymakers have played down any concerns
about a fall in inflation to 0.5 percent, casting it as
temporary, and Draghi's own line is that the euro zone is in no
danger of falling into a debilitating cycle of deflation.
But many in the market have also read comments from a number
of ECB officials in the past month as evidence that the bank is
concerned by the euro's gains so far in what was expected to be
a strong year for the dollar.
"I think Mr. Draghi may find a line or two that sound
dovish," said Jane Foley, a strategist with Rabobank in London.
"If he does that may weaken the euro somewhat."
After gaining almost half a cent overnight, the dollar was
flat against the euro at $1.3770.
The main move of the past two weeks on major currency
markets has been the dollar's steady march higher against the
yen, awakening hopes that the greenback may finally be set to
deliver on the break higher predicted by many banks in January.
The dollar has gained almost 3 percent against the yen since
U.S. Federal Reserve chief told markets on March 19 that the Fed
might raise interest rates next spring. It hit a new 10-week
high overnight before retreating a touch but was still higher
than a day earlier at 103.89 yen. U.S. jobs data on
Friday may be the decisive factor for any further gains.
"There is a lot of resistance (to more dollar gains) around
104 yen and we may not break that today," said a dealer with one
bank in London. "The key to any move higher will be non-farm
The head of the International Monetary Fund on Wednesday
called on the ECB to ease policy, warning "low-flation" in
advanced economies risked undercutting an already sluggish
But U.S. data has generally improved after a dip in fortunes
now put down largely to harsh winter weather. Worries over China
and Ukraine that prompted investors to seek the relative
security of the yen have also slipped at least momentarily off
"I do get the sense that the market is becoming much more
constructive about the dollar," said Rabobank's Foley.
"The March numbers should be relatively clean of harsh
weather and the market thinks payrolls will be relatively
strong. As long as we don't see any big rush into safe havens,
the dollar is heading higher against the yen."
Foley said in contrast she expected the euro to remain
robust, pointing to the currency area's trade surplus and
inflows of capital back into the southern member states worst
hit by four years of turmoil over public finances.
Still, a Reuters poll of over 60 foreign exchange
strategists taken this week predicted the euro would fall to
$1.37 in one month, $1.33 in six and $1.29 in a year.
Steen Jacobsen, chief investment officer with leading retail
FX platform Saxobank, sees the euro sinking to $1.25 this year
on the back of more aggressive action later in the year to ease
"You may argue that there is no real reason flows-wise for
the euro to weaken, but I think for the lobbies and policymakers
$1.40 is a line they cannot cross," he said. "I think it will
get there and that will lead to action."