* 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 (Reuters) - 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 $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 80.349, down from Thursday's four-month peak of 81.020.
Against the yen, the dollar eased 0.1 percent to about 102.34 yen.
"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 research note.
"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)
- USA News