* Euro back above $1.3600 after ECB action
* U.S. non-farm payrolls set to dominate trade
* Dealers see any euro rise capped below $1.37
(New throughout, changes dateline from previous
By Patrick Graham
LONDON, June 6 The euro held on to gains against
the dollar on Friday, a day after investors covered bets against
the single currency in response to long-promised steps by the
European Central Bank to bolster growth.
There were still voices in the market casting the ECB's cut
of interest rates into negative territory as the game changer
that may shift the torpid mood brought on by universally low
rates across the developed world.
But investors preferred to take profit on two weeks of falls
than push the single currency lower, putting put it firmly back
in a range it has held since December.
Many dealers and strategists said the ECB had not done
enough to weaken the euro. Several said U.S. jobs data on Friday
would only add to pressure on the dollar, trading at its lowest
in a week against a basket of currencies.
"What is clear is that it is going to be a real struggle to
get the euro any lower," said Jane Foley, a currency strategist
with Rabobank in London.
"That will really depend on the dollar bulls re-emerging and
that will depend on the U.S. data getting stronger."
The euro last traded at $1.3645, having recovered
from a trough of $1.3503 set on Thursday shortly after the ECB's
Dealers said many players who had been short of euros into
the ECB meeting - effectively betting on further losses - had
been squeezed by the bounce afterwards. But they said there were
substantial sell orders for the euro around $1.3680-1.3690,
likely to cap any further gains.
Jeffrey Halley, an FX trader for Saxo Capital Markets in
Singapore, said the initial drop on Thursday may have set an
interim low for the euro that could hold over the next few
Asked for his stance on the euro, he said: "It's buy dips to
$1.3600 looking for a squeeze to $1.3800."
One of the big trends to have supported the currency this
year still looked firmly in place on Friday - investors pushing
more money into the euro zone's peripheral southern bond
markets, where yields are still a little higher than those in
the U.S. and Germany.
Still, 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 $1.3820.
"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 80.311, down
from Thursday's four-month peak of 81.020.
Against the yen, the dollar eased 0.2 percent to about
Analysts polled by Reuters expect U.S. employers probably
added 218,000 jobs in May, a step down from April's gain of
288,000. But estimates are even wider than usual, ranging from
110,000 all the way to 325,000.
(Editing by John Stonestreet)